aramex annual report 2011 english.indd 1 4/10/12 11:32 am · aramex annual report 2011_english.indd...

Aramex Annual Report 2011_english.indd 1 4/10/12 11:32 AM

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MISSIONTo be recognized as one of the top five global logistics and express transportation service providers.

PURPOSETo enable and facilitate regional and global trade and commerce responsibly.


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• LetterfromtheCEO ..................................................................................................................................................... 6• AramexOverview ......................................................................................................................................................... 8 About this Report Our Performance Sustainability as a Strategic Investment Our Services• StrategicDirection ....................................................................................................................................................16 Growth Investing in our people Creating Value for our customers Being active corporate citizens• KeyNon-FinancialGoalsfor2012 .........................................................................................................................19• Awards&memberships ............................................................................................................................................21• Governance ...................................................................................................................................................................23 Management (Approach and Systems) Global Compliance• StakeholderEngagement ........................................................................................................................................28• OurPeople.....................................................................................................................................................................33• OurCustomers .............................................................................................................................................................38• SustainabilityFocusAreas......................................................................................................................................41 Education & Youth Empowerment Entrepreneurship Community Development Emergency Relief Sports Environment• ReportingProcess ......................................................................................................................................................52• GRI/UNGlobalCompactIndex .............................................................................................................................54• Acronyms ......................................................................................................................................................................58• Glossary ........................................................................................................................................................................59• ConsolidatedFinancialStatements .....................................................................................................................60• IndependentAssurance .........................................................................................................................................110

TABLEOFCONTENTS


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FADIGhANDOURFounderandCEO

ABDULLAhALMAzRUIChairman

Dear Stakeholder,

We are pleased to present you with Aramex’s 2011 Annual Integrated Report. This report highlights the interdependent relationship between Aramex’s sustainable business practices and overall performance, showcasing its active commitment to all its stakeholders.

We look upon this report as a management tool of a sort: beyond its obvious utility in helping us measure our financial performance as well as gauge our social and environmental impact, it allows us to assess the extent to which innovation and creativity drive our various services.

And, indeed, on all these fronts, 2011 has been a good year for Aramex.

Financially, we have continued our upward trajectory: robust growth in key services across all markets yielded a 16% increase in revenues, reaching AED 2,576 million; our net profits, at AED 211.5 million, regis-tered a relatively healthy climb of 4%, in spite of large investments in Greenfield operations in new markets, rising fuel prices and political instability in some Arab locales; and we maintained a healthy balance sheet, with a cash balance of AED 314 million.

Moreover, our expansions in Africa and Asia have proceeded according to plan. In North Africa, our Tuni-sian and Algerian networks are finally full-fledged. Similarly, in East African Kenya, Tanzania and Uganda, where we have launched full operations as well. In West Africa, our presence in Ghana has been appreciably upgraded, and we are currently looking to set up in Nigeria and the Ivory Coast. But the highlight of 2011 has been in South Africa, the largest economy on the continent. Through the acquisition of Berco Express, we welcomed 900 talented people to the Aramex family and established a strategic foothold in the south-ern region.

We have also maintained our momentum in Asia. Building on our previous acquisitions and partnerships in Turkey, Malaysia and Bangladesh, we have concluded a joint venture with SinoAir in China and started operations in Kazakhstan, in central Asia, a critical gateway that connects East and West through the historic Silk Road.

LETTERFROMThECEO


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Equally, on the operational front, we have invested in new technologies and improved efficiencies, reducing costs where optimal. We have also kept pace with the fast evolving needs of our e-commerce customers, developing storefront technology, scaling up warehousing and delivery and investing in online customer service support to retailers.

But perhaps the most rewarding moment of 2011 was the employee opinion survey, whose results were truly outstanding. Aramex employees gave their company an impressive 80% overall rating, exceeding those achieved by global high performing companies by 11%. This is a clear endorsement of our business model, our strategic investment in our cadre and, most importantly, our corporate culture, which empowers and insists on a motivating work environment. We are certain that it is our people’s passion and dedication that are driving our success as a company, and it is our corporate values that stand at the heart of our competitive advantage.

We have thus further enhanced frontline training, providing our team with the essential skills and tools to conduct their work efficiently. We have also upgraded our existing Customer Relations Management by deploying the Reach System, rolling it out across key countries in our network, covering over 60,000 customer records. This system supports a comprehensive customer management approach and provides our team members with a holistic view of customers’ interactions with Aramex.

These achievements are matched by Aramex strides in the social sphere. We have increased our involve-ment in the communities we operate in, partnering with Ruwwad for Development, a private sector led community empowerment organization that engages disadvantaged communities through youth activism, civic engagement and education, in Jordan, Egypt and Palestine.

We have also joined hands with the General Presidency of Youth Welfare and the Professional League Commission in Saudi Arabia to develop special needs facilities at football stadiums in Riyadh, Jeddah and Dammam. Through this initiative, Aramex started installing state-of-the-art accessibility facilities for those with special needs, allowing them to attend the games.

Aramex is also very proud to have published its first carbon footprint report as part of our ongoing efforts to benchmark our performance, reduce our carbon footprint and find innovative ways to adopt more envi-ronmentally friendly policies.

This integrated report is prepared in accordance with International Financial Reporting Standards (IFRS) and the Global Reporting Initiative (GRI), and it reaffirms our commitment to the United Nations Global Compact (UNGC). Following an independent audit, Aramex, for the fifth year running, received an A+ rating from GRI.

Over the course of 2012, we will pursue more expansions in South East Asia, Central Asia and Africa. Need-less to say, our key investments shall remain in our people and our customers. We expect many challenges, from increasingly difficult business conditions to instability in the Middle East region. But, often, with challenges come opportunities, and Aramex will be ready for both, working very hard to deliver on every promise to its stakeholders.




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As a leading global provider of comprehensive logistics and transportation solutions, Aramex enables and facilitates trade and commerce for over 60,000 cus-tomers around the world through responsible business practices. Established in 1982, our company rapidly evolved into a global brand recognized for its customized ser-vices and innovative multi-prod-uct offering, and became the first company from the Arab world to trade on the NASDAQ in 1997.After five years of successful

trading, the company moved into private ownership through a leveraged management buyout with Dubai-based Abraaj Capital. Today, Aramex is a publicly traded company on the Dubai Financial Market (DFM: ARMX), employing more than 9,500 direct employees and around 1600 indirect employ-ees in over 59 countries across the GCC, Levant, Africa, Asia, Europe and North America, and leads a strong alliance network of more than 40 companies further enhancing its global presence.

Acting responsibly towards all stakeholders — our customers, business partners, shareholders, people, communities, and the environment — has been our stra-tegic approach since the early days of the company. For Aramex, sustainability is a strategic deci-sion; it is embedded in our busi-ness model and reflected in all our practices.

ARAMEXOVERVIEW


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2007 2008 2009 2010 2011

Revenues

International express 519,085 610,343 626,588 689,111 836,638

Freight forwarding 823,993 912,599 758,790 924,101 1,073,301

Domestic express 224,988 295,665 302,302 331,153 373,120

Logistics 106,766 132,654 124,485 103,764 110,760

Publications and distribution 35,952 35,955 31,745 30,035 28,318

Others 73,004 92,738 116,877 133,832 154,062

Total Revenues 1,783,788 2,079,954 1,960,786 2,211,996 2,576,199

Shipping costs 948,133 1,041,971 852,745 1,021,830 1,221,261

Gross profit 835,654 1,037,983 1,108,041 1,190,166 1,354,938

Share of profits (losses) from JV’s 0 0 130 (256) (554)

Share of profits (losses) from an associate (200)

Operating expenses 268,548 364,961 412,798 444,596 508,987

Selling, general and administrative expenses 424,095 497,797 489,334 519,087 593,542

Operating income 143,011 175,225 206,039 226,227 251,655

Interest income 8,070 5,375 14,204 16,283 7,360

Interest expense (4,131) (3,442) (1,830) (1,166) (1,756)

Gain (loss) on sale of fixed assets (298) (853) (259) (458) (8)

Exchange gain (loss) 3,442 1,771 (1,090) 1,264 228

Other income (loss) 422 1,869 1,100 2,362 2,278

Income before income taxes 150,516 179,945 218,163 244,512 259,757

Provision for income taxes (9,450) (10,573) (11,441) (14,935) (17,799)

Non-controlling interests (19,515) (22,051) (22,435) (25,485) (30,420)

Net Income 121,551 147,321 184,287 204,092 211,538

OURPERFORMANCE

ConsolidatedIncomeStatement(InThousandsinUAEDirhams)(YearendedDecemeber31)

ABOUTThISREPORT

Since releasing our first sustain-ability report in 2007, we have consistently reported on our commitments and progress as a company, and have implemented a variety of innovative policies, procedures, and initiatives deliv-ering on our sustainability com-mitment to stakeholders.

Our financial statements are maintained in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting

Standards Board (IASB), and are reported in line with the regula-tory requirements of the Securi-ties and Commodities Authority (SCA) of the United Arab Emirates.

This is the second year in which we have issued an integrated report. This edition also features our carbon footprint report, released for the first time last year, and therefore presents our readers with a truly holistic review of our company’s performance.

This report complies with the regulations of the UAE and the

Global Reporting Initiative (GRI), is self-declared as GRI Level A, and maintains a rating of A+ fol-lowing independent assurance. It also covers the ten principles of the United Nations Global Compact.

In sharing this report, we hope to foster ongoing dialogue with our stakeholders on our perfor-mance, progress, and ongoing commitments.


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RESULTSOFOPERATIONSThEFOLLOWINGTABLESETSFORTh-FORThEPERIODINDICATED-ThEPERCENTAGESOFTOTALREVENUESREPRESENTEDBYCERTAINITEMSINThECOMPANY’SCONSOLIDATEDSTATEMENTOFINCOME

2007%

2008%

2009%

2010%

2011%

REVENUES

International express 29.1 29.3 32.0 31.2 32.5

Freight forwarding 46.2 43.9 38.7 41.8 41.7

Domestic express 12.6 14.2 15.4 15.0 14.5

Logistics 6.0 6.4 6.3 4.7 4.3

Publications and distribution 2.0 1.7 1.6 1.4 1.1

Others 4.1 4.5 6.0 6.1 6.0

TotalRevenues 100.0 100.0 100.0 100.0 100.0

Shipping costs 53.2 50.1 43.5 46.2 47.4

Grossprofit 46.8 49.9 56.5 53.8 52.6

Operating expenses 15.1 17.5 21.1 20.1 19.8

Selling, general and administrative expenses 23.8 23.9 25.0 23.5 23.0

Operating income 8.0 8.4 10.5 10.2 9.8

Income before income taxes 8.4 8.7 11.1 11.1 10.1

Provision for income taxes 0.5 0.5 0.6 0.7 0.7

Non-controlling interests 1.1 1.1 1.1 1.2 1.2

NetIncome 6.8 7.1 9.4 9.2 8.2

YEAR2010

DESCRIPTIONINTERNATIONAL

EXPRESS31%

FREIGhTFORWARDING

42%

DOMESTIC&OThERS

27%

TOTALCOMPANY

100%

Middle East 755.6 75.5% 655.4 59.6% 484.7 78.2% 1,895.7 69.7%

Europe 83.5 8.3% 300.8 27.4% 97.2 15.7% 481.4 17.7%

North America 59.3 5.9% 43.5 4.0% 1.5 0.2% 104.3 3.8%

Asia & Indian Sub Continent 102.8 10.3% 99.8 9.1% 36.1 5.8% 238.7 8.8%

Elimination (312.0) (175.4) (20.7) (508.1)

TOTAL 689.1 100% 924.1 100% 598.8 100.0% 2,212.0 100%

GeographicalBreakdownofRevenues(InMillionsofUAEDirhams)

YEAR2011

DESCRIPTIONINTERNATIONAL

EXPRESS32%

FREIGhTFORWARDING

42%

DOMESTIC&OThERS

26%

TOTALCOMPANY

100%

Middle East 859.6 71.0% 739.3 59.0% 543.0 78.7% 2,141.8 67.9%

Europe 108.6 9.0% 391.3 31.2% 91.1 13.2% 591.0 18.7%

North America 83.3 6.9% 44.9 3.6% 3.5 0.5% 131.7 4.2%

Asia & Indian Sub Continent 158.9 13.1% 77.2 6.2% 52.6 7.6% 288.7 9.2%

Elimination (373.7) (179.4) (23.9) (577.1)

TOTAL 836.6 100% 1,073.3 100% 666.3 100.0% 2,576.2 100%

ConsolidatedBalanceSheetData(InThousandsofUAEDirhams)(YearendedDecember31)

2007 2008 2009 2010 2011

BALANCEShEETDATA:

Working capital 344,452 447,668 570,611 650,340 477,645

Total assets 1,674,836 1,845,307 2,058,222 2,286,458 2,492,781

Total liabilities & Non-controlling interests 389,661 437,768 462,566 505,459 627,671

Total shareholders equity 1,285,175 1,407,539 1,595,656 1,780,999 1,865,110


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Key Non-Financial Information

% of Pre-Tax Profits for Corporate Activism

OUR PEOPLE

Number Of Employees

% Of Increase in Employment

% of Female Employees From Total Aramex Employees

% of Females in Management

# of Locally Hired Management

Average Training hour per employee

HEALTH AND SAFETY PERFORMANCE INDEX

Summary

Fatalities

Accidents per Million Shipments

Percentage change in accidents per Million Shipments

Lost Time Injuries per Million Shipments

Lost Time Injuries Frequency Rate

2009

2.50%

8101

6%

11%

25%

277

17

0

20

-28%

1.1

0.51

2011

2.33%

9500

10%

12%

17%

344

20

0

12.3

-14%

6.7

0.33

2010

2.60%

8675

7%

11%

25%

338

21

2

14.3

-21%

2.6

0.41


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SUSTAINABILITYASSTRATEGICINVESTMENT

Our commitment to sustainabil-ity is a reflection of our long-term management approach, which aims to create shared values for all stakeholders, and stems from our conviction that sustainable business practices and overall performance are intertwined

We are keen to encourage inclu-sive and transparent dialogue regarding our performance, com-mitments, and plans for sustain-able growth. Hence, our sustain-ability performance is presented in an integrated annual report for the second time this year, com-bining financial and non-financial results, and affirming our com-mitment to a holistic manage-ment approach.

Being embedded in our daily operations, sustainability directs every decision we make on all levels in the company; our agile business model enables us to swiftly respond to forces of

change, while the company’s federal, decentralized struc-ture empowers our people to be responsive to evolving customer needs. Furthermore, being a local entity in areas where we operate creates local job opportunities and enables us to address some of the challenges of the local com-munities in which we operate.

Our corporate activism model is built on strategic partnerships in order to ensure long-term viability and impact. We have prioritized our efforts over the following areas of focus: commu-nity development by focusing on youth empowerment, education and entrepreneurship, in addition to sports, the environment and emergency relief.

To facilitate knowledge sharing about our sustainability ini-tiatives, we are utilizing our dedi-cated web portal www.aramex.org as an interactive platform and a virtual space where stakehold-ers can engage in discussions regarding latest sustainability

trends and case studies. Addi-tionally, we are utilizing online social media channels to engage our stakeholders in an effort to enhance our communication tools and to increase awareness of corporate activism.

Environmental responsibility is at the core of our strategy, and we have been keen to monitor and reduce our impact on the environment by deploying various systems and technologies. We strive to reduce our resources consumption while adhering to international standards for envi-ronmental protection, as well as best practices for health, safety and security.

OURSERVICES

InternationalExpressDelivery

We provide global door-to-door shipping solutions for time-sen-sitive documents and packages to customers in various indus-tries, including banks, trading,


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pharmaceutical, manufacturing and regional distribution com-panies. Our express services offer a range of options that allow customers to balance cost and speed, and include features such as real-time online tracking updates, automatic delivery noti-fications, proof of delivery, and a wide range of import, export, and customs clearance services.

During 2011, we continued the institutionalization of the use of environment-friendly biodegrad-able pouches for all express ship-ments across our entire network. In addition, we continued our use of biodegradable plastic windows in our recycled cardboard enve-lopes, electronic invoicing, and online pick-up requests, as detailed in our previous sustain-ability reports.

FreightForwarding

Our freight services cover air, land, and ocean transportation, providing cost-effective delivery for heavier packages with less time-sensitive delivery require-ments compared to express ship-ments. Our comprehensive menu of freight services range from port-to- port to door-to-door deliv-ery, and include customs clear-ance, advanced online tracking, temperature-controlled haulage, third-party shipping, regional distribution, chartered aircraft or vessel services, and exhibition handling.

Land freight, a less costly and more environment-friendly alter-native to air freight, is increas-ingly in demand by our custom-ers. Today we have one of the most extensive and advanced land freight networks in the

Middle East, Ireland, and the United Kingdom. We have also focused on expanding our ground transportation reach in the GCC and Levant regions to cater to rising demand for efficient inter-regional delivery services.

DomesticExpressDelivery

Our Domestic Express service provides door-to-door delivery of urgent packages within a country or city. The service can be customized to meet custom-ers’ specific needs, with options including same-day or next-busi-ness-day deliveries, package col-lection, return service, and cash on delivery.

During 2011 we introduced Aramex Developers Solutions Center, where we provide our cus-tomers with state-of-the-art APIs (Application Programming Inter-face) and e-tools that allow seam-less integration with our various applications – whether a desktop application, an ERP (Enterprise Resource Planning) solution, a website, or a web service – from tracking a shipment to request-ing a pickup. This integration allows customers to automate operations, reduce costs, and minimize errors.

We continue to promote our technology tools to customers to enable them to use shipping labels instead of conventional waybills, thereby reducing paper consumption considerably. Fur-thermore, our fleet complies with our responsible procurement policy, which ensures that car engines are a minimum of Euro 4 emissions standard, and pro-motes the adoption of alterna-tive energy technologies, such as

battery-operated scooters, hybrid vehicles, and bikes.

IntegratedLogistics,Warehousing,andSupplyChainManagement

Our end-to-end logistics solutions efficiently manage the trans-fer, storage, and distribution of products and information during all stages of the supply chain, from the moment our customers’ inventory leaves their suppliers or factories until it reaches their retailers or end consumers. We also provide third-party facility management and consultancy services.

Aramex logistics centers are strategically located in key areas across the GCC, Middle East, North Africa, Western Europe, and Asia, and are powered by state-of-art technologies to ensure world-class security and real-time visibility at all levels.

In our efforts to continuously address environmental chal-lenges, all newly constructed Aramex logistics centers will be LEED certified to achieve energy savings, water efficiency, and CO2 emissions reduction. Moreo-ver, our warehouses are currently being OHSAS certified and use only electric-powered forklifts.

InformationManagementSolutions(InfoFort)

InfoFort, a wholly-owned Aramex subsidiary, is the leading secure records and information manage-ment solutions provider in the Middle East and North Africa. InfoFort’s services address the growing need for data and infor-mation security, confidentiality,


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accessibility, preservation, com-pliance and business continuity. It provides solutions covering the full information life cycle, and includes the secure storage and management of physical and electronic records, media/tape vaulting and rotation, secure shredding, IT escrow services, cheques management, and con-sultancy services.

In 2011 InfoFort also introduced Secure Data Destruction ser-vices to help clients destroy (and recycle) their data-rich retired IT assets, such as hard drives and tapes. The company also received ISO 9001 certification for Physi-cal and Electronic Records man-agement in the UAE, and became the first in its industry in the region to have a comprehensive Business Continuity Management Program (BCP) in place.

Moreover, InfoFort inaugurated

its largest single records man-agement center in North Africa in Egypt, and expanded its opera-tions into Kenya and Ghana.

InfoFort has also launched InfoCare, a social platform for enabling information driven sus-tainability initiatives. Under this platform, InfoFort introduced practices that help reduce paper consumption and thus save trees, and encourages environmentally friendly practices by facilitat-ing the recycling of customers’ electronic and IT waste. InfoFort also supports mission critical organizations by automating their paper driven processes and enabling them to be more respon-sive. Furthermore, under InfoCare, InfoFort supports underprivileged and marginalized youth who are unemployed with information-based skills that can help them grow, develop, and become pro-ductive and self-sufficient.

E-BusinessSolutions

ShopandShipShop and Ship is an online shop-ping delivery service that enables thousands of customers around the world to receive purchased goods from US, UK and China online stores easily, quickly and affordably. The service is pro-vided in more than 25 countries across the Middle East, Africa, Europe, and Asia.

E-CommerceSolutionsAs the e-commerce sector wit-nesses continuous growth in emerging markets, Aramex is utilizing its logistics expertise and infrastructure to partner with entrepreneurs and online retail sites, further enabling trade and commerce and creating economic opportunities in these emerging markets. The growth of e-busi-ness also has potential environ-mental benefits resulting from


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reductions in energy and paper consumption.

We provide a range of solutions to help start-ups as well as estab-lished retailers set up or expand their e-commerce operations, including warehousing and inte-grated logistics, payment collec-tion services, order processing, and outsourcing of customer service through various contact centers. We have also deployed a wide range of technical support to compliment this thriving industry,

by extending different levels of access to our APIs (Application Programming Interface), in order to facilitate integration with any e-business.

Apps&MoreKeeping in tune with the advances in mobile apps and the ever-grow-ing dominance of smart phones and tablets, Aramex has launched two iOS apps and a Windows Phone 7 (WP7) app for Aramex Tracking and Shop and Ship. We are also currently working on

releasing versions for Android and Blackberry, and an updated Version 2 for iOS. In addition to mobile apps updates, Aramex launched several innovative tools that complement the high adop-tion rate of Social Media, includ-ing a Facebook app for tracking Aramex shipments on the Face-book platform, and Tweet & Track to track Aramex or Shop and Ship orders on the Twitter platform.


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STRATEGICDIRECTION

We aim to continuously reinforce our position as one of the top global logistics and transporta-tion companies by expanding our worldwide network, continuously innovating solutions to meet our customers’ evolving needs, and serving our communities. The following summarizes the key elements of our strategy for achieving profitable growth and sustainable value creation for all stakeholders in the long-term.

GROWTh

Aramex is pursuing a multi-fac-eted growth strategy to achieve our strategic goals and satisfy our customers’ specific needs. Our approach to growth includes the following elements:

Acquisitions and Joint VenturesinEmergingMarkets Emerging markets offer ideal opportunities for the expansion of our global network. By applying

the Aramex business model and establishing industry leadership in these new markets, we aim to strengthen our position as one of the top five global logistics and transportation solutions providers. Our mid-term focus remains the pursuit of small- and medium-scale acquisitions and joint ventures in politically stable high-growth economies, par-ticularly in Africa, Asia, and the Commonwealth of Independent States (CIS).

Berco Logistics in South Africa, our most significant acquisition in 2011


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In keeping with our focus on sustainability, our service offer-ings aim to enhance domestic economic conditions in develop-ing regions and support local businesses by enabling and facilitating commerce. Simulta-neously, we also aim to integrate a number of medium-sized busi-nesses within our existing opera-tions in core markets, with a view to achieving greater efficiency in our operations and delivering more value to clients.

In 2011 we concluded a series of acquisitions in South Africa, Kenya, and Ireland; we also established a joint venture in China with Sino Air, and launched greenfield operations in Uganda, Tanzania and Kazakhstan. Our expansion in the South and East

African regions complements our strengthened presence in South East Asia, providing a bridge between these important trading partners and connect-ing them to global trade hubs, while also representing a sig-nificant contribution to Aramex’s global operations. Establishing a

strong foothold in these dynamic markets will also serve to unlock new opportunities for us to expand into further expanding in African and Asian markets and enabling trade between emerg-ing economies and build upon our growth strategy in 2012.

Globalizing the Brand throughFranchising

Our franchising strategy provides growth opportunities to local and regional transportation com-panies looking to offer a global service through our established IT systems, global network, and branding. Aside from providing additional revenue streams with minimal capital and management costs, franchising facilitates market entry, and allows us to

benefit from local knowledge, grow our revenue base, expand brand awareness, and improve our service offering. The rela-tionships we build through our franchises also help us to develop mutual corporate values and shared sustainable business practices.

Investing in Infrastructure andTechnology to Support OrganicGrowth There are various opportunities in our core markets to further develop products and services using existing infrastructure. By continuing to invest in purpose-built logistics facilities at exist-ing Aramex locations, we aim to capitalize upon the increasing demand in the Middle East and South Asia for the outsourcing of supply chain and informa-tion management services. In keeping with our commitment to the highest environmental stand-ards, all Aramex logistics centers constructed in 2011 are in the process of obtaining LEED certi-fication, and we intend to ensure that all future facilities of this

type undergo LEED certification. We will also continue to improve our communications network and information systems, investing in technology to achieve further enhancements in the quality and efficiency of our operations and customer service.

Aramex Netherlands moves its home to a multifunctional logistics park in Schiphol Airport.


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Supporting Entrepreneurshipand E-businesses to EncourageGrowthinTrade

Our values, as well as our entre-preneurial history and culture, have given us a unique under-standing of the strategic role enterpreneurship plays in devel-opment, creating jobs and gen-erating macroeconomic growth. We continue to forge strategic partnerships with world-class institutions to provide direct mentorship, support and solu-tions for aspiring entrepreneurs, and actively work with local start-ups and SMEs to encourage and support the development of small businesses. Our efforts in this area are detailed in the Sustain-ability Focus Areas section of this report.

In view of the significant growth projected in e-commerce in the Middle East, Aramex is also build-ing partnerships with online retailers. By bringing our exten-sive logistics expertise and infra-structure to bear in facilitating payment and delivery systems, we hope to spur further growth in

trade by enabling SMEs to expand their markets through online platforms.

INVESTINGINOURPEOPLE

Investing in our people remains to be the forefront of our priorities, and we consider this to be crucial to our sustainable growth. We continue to invest in our employ-ees in a variety of different ways. By developing employee training programs through our corporate university, as well as partnering with leading regional and global academic institutions, promoting local leadership, ensuring good working conditions, and enhanc-ing our human resource manage-ment systems, we aim to build a corporate culture that attracts and nurtures talent. For more details on our programs, please refer to the Our People section of this report on page 33.

CREATINGVALUEFOROURCUSTOMERS

Aramex is a customer-centric organization that strives to deliver on its promises. We view

our customers as long-term part-ners, and pride ourselves on our close engagement and respon-siveness to clients, continuous service improvement and inno-vation, and specifically tailored solutions. For further details, please see Our Customers section of this report on page 38.

BEINGACTIVECORPORATECITIzENS

We believe that achieving long-term growth involves working to preserve the environment, and being a responsible, active partner in the communities in which we operate. We have there-fore devised a framework to guide our corporate activism in specific focus areas, details of which can be found in the Sustainability Focus Areas section of this report on page 41.


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KEYNON-FINANCIALGOALSFOR2012

KEYAREA 2011GOAL STATUS TARGETFOR2012

EMPLOYEESHuman Resources Management System

Expanding the adoption of our HRMS in 10 new stations

Achieved in 9 new locationsFinalize the rest of the network

Employee Satisfaction and Motivation

Developing action plans in response to employee satisfaction survey results

CompleteContinue work on implementation of action plans

Workplace Conditions Piloting SA8000 certification in 2 stations Pilot delayed 2 stations certified

Providing human rights and labor rights training programs in major stations

In progressComplete implementation

Learning and Development Framework

Revamp and update the career development plan ensuring alignment with the competency framework and required learning direction

Complete Continue to improve

Anti-bribery and corruption training In progressImplement across the network

Training Quality Review and update Aramex training material In progress Continue work

Expanding the delivery of soft skills training In Progress Continue work

Monitoring and enforcing the alignment of trainers with the Aramex trainer selection criteria

Complete Continue Work

Implement Online Education Practices

Run and test an on-line learning management system at Aramex

Complete

Choose a new system and start the implementation of a pilot phase

Executive Education Hold at least one executive education program CompleteHold one executive education program

hEALTh&SAFETY

TrainingContinue the delivery of job specific health and safety training to all employees

In progress Continue work

Achieving OHSAS certification in 4 additional stations

Achieved in 2 stationsAchieve in 2 additional stations

Policies and Procedures

Update emergency evacuation plans Complete Continue to improve

Update Health, Safety and Security related policies and manuals.


Performance Reduce accidents per shipment by 10% CompleteReduce by a further 10%

Achieve Zero fatalities Complete Maintain

The following table outlines our key non-financial issues and the correspondinggoalswehavesettoachievein2012:


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Reduce Lost Time frequency rate by 10% CompleteReduce by a further 10%

MonitoringUpgrade the data collection system for incidents/accidents and root cause analysis.


SafetyUpgrade safety and physical security measures in all facilities


Quality Achieving ISO 9001 in 3 additional stations 2 complete, 2 in preparation 2 new stations

Pilot Cargo 2000 certification Preparation complete; awaiting audit

Receive certification

Develop a supplier evaluation form and piloting implementation with major suppliers

Form complete; implementation pending

Implementation for all suppliers

ENVIRONMENT

Internal AwarenessExpanding the delivery of the environment awareness training program to all stations

CompleteExtend to entire network

Materials Develop a packaging materials tracking system In progressTo be implemented in 2012

Implement a waste measurement system in 6 major stations

12 stations completeExpand to 10 more stations

PerformanceConduct carbon footprint analysis with a third party

Complete; first report issuedContinue reporting and carbon footprint reduction

FacilitiesAchieving LEED certification in all newly constructed logistics centers in 5 locations

All in progress; delay in construction

Finalize certification for all warehouses under construction

Achieving ISO14001 in 10 stations Complete 6 additional stations

CORPORATEACTIVISM

Engagement Conduct 3 sessions of stakeholder dialogues 1 session conducted Conduct 2 sessions

ReachExpand corporate activism into emerging markets where we have expanded

Complete Expand into Africa

Support the education of around 200 youth Complete Support 300 students

Empower entrepreneurs and SMEs by providing training programs

Complete Continue

CUSTOMERSCustomer Satisfaction Surveys

Identify and upgrade customer satisfaction measurement tools


Pilot the customer satisfaction measurement tools initiative at one of Aramex locations

CompleteImplement across remaining network

Service ExcellenceDrive 50% of total transactions to be done electronically via Aramex e-tools

In progress Improve

Deploying the new customer service application in 9 locations

Applied in over 90% of locations

Complete implementation

Upgrade our current customer service policies and procedures


Upgrade our contact center auditing system Complete Continue to improve

Conduct customer service training for all frontline employees


Enhance incentive schemes for frontline employees


Provide customized solutions to support SMEs and entrepreneurs

In progressComplete implementation

Complaint Handling Upgrade our customer complaint system Complete Continue to improve

Expand our complaint capturing mechanism to include all customer touch points


Customer EngagementUpgrade our social media engagement and reporting



21

AWARDSANDMEMBERShIPSAWARDSIN2011Best Small Call Center at the 2011 UAE Call Center Awards 2011

Special Services Award at the 2011 British International Freight Association (BIFA) Awards in London

Most Improved Website in the Consumer and Lifestyle section of the Internet Awards Middle East, Dubai for (www.shopandship.com)

FORUMS,FOUNDATIONS,ASSOCIATIONS,ANDNGOSINJAZ INJAZ al-Arab covering the Middle East

United Nations Global Compact (UNGC) Members since 2007, we are now involved in human rights, anti-bribery, and anti-corruption working groups.

World Economic Forum (WEF)

• Global Corporate Citizenship Initiative Advisory Committee• Partnering Against Corruption Initiative (PACI)• Sustainability work stream working on Supply Chain De-carbonization

The Arab Foundation for Sustainable Development “Ruwwad” Founding Member

The American Chamber of Commerce in Jordan(AmCham-Jordan)

Member

World Trade Center Jordan Chapter Member

Jordan European Business Association (JEBA) Member

Global Reporting Initiative Organizational Stakeholder

Arab Sustainability Leadership Group Part of the founding group

Chambers of Commerce in all countries of operations Member

Women Against Violence Conference – Amman- Jordan Women Against Violence Association (WAV)(www.womenav.org)

SupporterSupporter

Arab Distributors Conference in Lebanon Member

Digital Opportunity Trust DOT Board Member

AMIDEAST Lebanon Board Member

Receiving the Middle East Call Center Awards

for best Small Call Center


22 A n n u a l R e p o r t | 2 0 1 1

MEMBERShIPSFREIGhT International Air Transport

Association (IATA)

The International Air Cargo Association (TIACA)

Fédération Internationale des Associations de Transitaires et Assimilés/International Federation of Freight Forwarders Associations (FIATA)

World Freight Alliance (WFA)

Freight Forwarding Syndicate

Air Cargo Netherlands (ACN)

Fenex

EVO (Netherlands)

We are IATA-approved agents with individual CODE/CASS numbers in Algeria, Bahrain, Bangladesh, Canada, China, Cyprus, Czech Republic, Egypt, Ethiopia, France, Germany, Ghana, India, Indonesia, Iran, Iraq, Ireland, Jordan, Kuwait, Lebanon, Libya, Malta, Mauritius, Morocco, Nepal, Netherlands, Oman, Qatar, Saudi Arabia, Shanghai, Singapore, Slovakia, Sri Lanka, Sudan, Switzerland, Syria, Turkey, UAE, UK, USA, and Vietnam. Some main stations are individual members, while the remaining stations are in the process of becoming IATA-approved.

Member

Founding member

President

Member

Member

Member

Member

LOGISTICSANDGROUNDOPERATIONS

Supply Chain and Logistics GroupMember

Express Global Distribution Alliance (GDA)

Express Delivery and Logistic Association

Founding member

Member

INFORMATIONTEChNOLOGY Information Technology Association of Jordan (INTAJ)

Member

BUSINESSIMPROVEMENTANDEFFICIENCY

BSI Registered (British Standards Institute)

Member

SECURITY Transported Assets Protection Association (TAPA) – Jordan

Transportation Security Association (TSA) – USA

Customs Trade Partnership Against Terrorism (C-TPAT) - USA / Customs Dept.

Department for Transport (DfT) - UK

Member

Aramex is an indirect air carrierAramex NYC is a member

TwoWay and Priority are listed agents

Listed agent (Aramex UK)

ENVIRONMENT Arab Forum for Environment and Development (AFED)

Jordan Green Building Council (JGBC)

Abu Dhabi Sustainability Group (ADSG)

Member

Member

Member

OThERS KAMCO: Brokerage - USA

ABANA: Association of Arab Banks for North America

MCAA: Messenger Courier

Association of America

Private Investors for Africa

Member

Member

Member

Member

Member


23

The current Aramex Board of Directors, which was elected by our Annual General Assembly on May 30, 2011, consists of the fol-lowing members:

• Mr. Abdullah M. Mazrui, Chairman• Mr. Fadi Ghandour, Founder, Chief Executive Officer and Director• Mr. Helal Al-Marri, Director• Mr. Ahmed Al-Badi, Director• Mr. Arif Naqvi, Director• Mr. Charles El Hage, Director

• Mr. Ayed Aljeaid, Director• Mr. Mana Al-Mulla, Director• Mr. hussein Hachem, Director

Aramex’s nine-member Board of Directors strives to cement the company’s position as a leader in corporate governance by implementing and upholding its Charter and Corporate Govern-ance Guidelines. Seven of the Board members (78%), including its chairman, are independent non-executive directors, while the remaining two members are

management representatives: Fadi Ghandour, the Founder and CEO of Aramex, and Hussein Hachem, Aramex CEO for the Middle East and Africa.

Our Board selection process involves nominations by shareholders and other Board members, and strictly adheres to the Board’s Charter and Cor-porate Governance Guidelines. The process also ensures that all candidates are highly-qualified individuals who possess the

GOVERNANCE


24 A n n u a l R e p o r t | 2 0 1 1

necessary knowledge and exper-tise of material, environmental and social issues pertinent to the company and its operations. In the rare event that potential con-flicts of interest arise, they are self-declared by the members of the Board, who are then excused from related discussions. Where necessary, the Chair or other members are also entitled to identify potential conflicts of interest involving other members.

The Board meets regularly, in accordance with our internal cor-porate governance code, while shareholders are entitled to raise issues with the Board during the Annual General Meeting. Two standing Committees — the Audit Committee and the Nomination and Remuneration Committee — have their own charters that stipulate their responsibilities and tasks. The Audit Commit-tee receives direct reports from Aramex’s Internal Audit function and briefs the Board accordingly, in compliance with the corporate governance code of the Securi-ties and Commodities Authority (SCA of the United Arab Emirates). The Internal Audit department employs a systematic and disci-plined approach to the evaluation and improvement of the com-pany’s effectiveness in the areas of risk management, control, and governance processes. Operating under the standards set forth by the Institute of Internal Auditors, the Audit department provides the Board of Directors, the Audit Committee and the Management with independent assurance that financial and operational mechanisms are functioning as intended. It also serves to reas-sure members that appropriate control mechanisms are in place to manage areas of high-risk

and implement benchmark poli-cies, procedures and activities to achieve best practices.

In keeping with Aramex’s commit-ment to being a responsible cor-porate citizen, our Founder and CEO, Mr. Fadi Ghandour, regularly briefs the Board on the company’s strategic stakeholder approach, as well as its sustainability ini-tiatives and results, and how these elements relate to overall corporate performance. Aramex strives to continuously pursue sustainability at the corporate level, and implements internal policies relating to the environ-ment, responsible procurement, and whistle-blowing. Strategic sustainability-related decisions are discussed at Board meetings, and Board approval is required for all major sustainability initiatives or targets prior to their implemen-tation, as per the Board’s code of conduct.

In line with the AccountAbility AA1000 principle of inclusivity, shareholders and employees are encouraged to provide input via the whistle-blowing mechanism offered through the company’s intranet. Our whistle-blowing policy, implemented to empha-size Aramex’s commitment to transparency, ensures discrep-ancies are reported and dealt with promptly to ensure ethical business practices and protect employees. While the Board does not generally have direct contact with employees, it remains fully appraised of their opinions and concerns through the feedback processes offered by the Aramex system.

Each year the company’s share-holders receive the Board’s recommendation regarding the

remuneration to be paid to the company’s directors. For the year ended December 31, 2011, the Company’s shareholders approved the Board’s recom-mendation that directors would receive US $54,795 each. In order to automatically succeed in placing an item on the Board’s agenda, a shareholder must possess a holding of at least 10% of the company’s shares. At present, the highest holding is less than 10%, which means items for discussion are tabled at the Board’s discretion.

Aramex is listed on the Dubai Financial Market (DFM), and com-plies with the Securities and Commodities Authority’s (SCA) Corporate Governance Regula-tions for Joint Stock Companies and Institutional Discipline Cri-teria, a mandatory requirement since 2010. Furthermore, building on our commitment to transpar-ency, we have produced an inde-pendent governance report in compliance with the SCA, which is available on our website.

As a member of the transporta-tion and logistics community, Aramex complies with all neces-sary regulations related to the industry; these include stipu-lations delivered by local and international regulators covering the handling of hazardous mate-rial and the accuracy of labeling and information concerning our services.

We strive to ensure that the impact of our services on all stakeholders is consistently posi-tive, and that any negative impact we may have is reduced to an absolute minimum; for example, we are working tirelessly to reduce our carbon footprint.


25

We incorporated ethical busi-ness training into our induction program for the first time in 2011, and continued to provide further training to those leading our major operations. We view our training regime as an ongoing, continuous process, and intend to increase the frequency of our programs for existing employees.

During 2011 Aramex did not experience any instances of non-compliance with local or interna-tional regulators, nor did we face any anti-competitive or antitrust

legal actions—an indication of the success of our aim to ensure all operations comply with appli-cable international and national laws and regulations.

Our internal auditing team conducts regular audits on all our offices covering all lines of business; this also includes corruption risk assessments. A single case of corruption was reported during 2011, in which an employee in Dubai sought a bribe to secure a job for a prospective candidate; the attempted corrup-tion was detected, resulting in the termination of the employee concerned. Being a local company in each market Aramex always try

to source its purchases from the local suppliers; we have issued our responsible procurement policy last year and we made sure that this policy is implemented; on their other hand end of 2011 we started a process of calculat-ing the data for all our purchases per location and to analyze which items can be sources locally and which needs to come from outside.

Aramex policy dictates that the company shall not accept any funds from governments or

political parties, and no such funds were received during 2011; neither will the company lend its support to any political party or movement.

humanRights

Engrained in our organizational culture, and formalized by our signing of the United Nations Global Compact, is our stead-fast attention to human rights in all our business activities. We ensure that our stakeholder-based code of conduct empha-sizes the importance of human rights, including equal opportuni-ties and treatment of employees, health and safety standards in

the workplace, and respect for diversity in our workforce.

We have finalized a supplier eval-uation form covering all issues related to human and labor rights; this will be rolled out during 2012 to ensure that all of our suppliers are fulfilling their obligations to human and labor rights require-ments in all their business and non-business areas, in keeping with international standards.

MANAGEMENT(APPROAChANDSYSTEMS)

Aramex remains committed to delivering on its promises to all stakeholders during prosperous and challenging times. Thanks to our agile business model, entrepreneurial people, and holis-tic management approach, we achieved remarkable financial results and continue to deliver value to all stakeholders through the global recession and in times of uncertainty and instability.

Our federal structure, in addi-tion to our partnership model with businesses, social entre-preneurs and local, regional and international NGOs among other partners; enables us to directly invest in the communities we exist in by creating employment opportunities and contribut-ing to the social and economic development of the countries in which we operate. Recogniz-ing that our core services of transportation and logistics have a direct impact on the envi-ronment, we continue seeking mitigation measures through the development and instate-ment of responsible policies. As an example, our responsible procurement policy requires the


26 A n n u a l R e p o r t | 2 0 1 1

careful consideration of vehicle emission levels before inclusion in our fleet, while our selection of consumables is based on envi-ronmentally- friendly criteria. Our recent upgrades have included the use of labels instead of paper-intensive waybills, and the automation of processes with the aim of reducing paper consump-tion. Furthermore, we continue to engage our employees in internal awareness campaigns and train-ings that focus on the conserva-tion of energy, water and paper among other issues. Our ongoing commitment towards responsible environmental management is reflected by the maintenance of ISO 14001 certification at eight-een sites (ten new additions in 2011) and our plans to receive the certification in six additional sites in 2012.

Our people are at the heart of Aramex. Accordingly, we uphold our policies as an equal oppor-tunity employer, while invest-ing in the ongoing training and career development of our exist-ing human capital. By building and maintaining a culture that fosters innovation, empower-ment and intrapreneurship, we continue to provide job satisfac-tion and drive better productivity. Furthermore, we ensure employee well-being by implementing the highest health, safety and secu-rity measures. Currently, we are in compliance with OHSAS 18001 principles, maintain certification at fifteen stations (two new addi-tions in 2011) and we are plan-ning to certify six additional sta-tions in 2012. As well, we are in the process of adopting SA8000 international labour standards, and incorporating and complying with the AA1000 principles into

our business model.

ContinuousImprovement

The pursuit of continuous improvement remains at the core of our management approach. The adoption of innovative tech-nologies and standards is a stra-tegic need and commitment, one that results in better monitoring and higher quality performance. Our global network remains con-nected through an integrated communication system, ensuring seamless flow of information across our global operations. In addition to the ongoing deploy-ment of advanced tracking systems, Aramex is actively developing IT solutions that con-tinuously enhance our services.

Meanwhile, our specialist Busi-ness Improvement and Efficiency team monitors and assesses our adherence to corporate poli-cies, standards and procedures as set forth in the network wide ‘InfoHub’. This system is continu-ously updated according to needs that arise and is certified by the British Standards Institute (BSI). To further improve the safety of our operations and ensure quality of service, we launched a ‘Together for Safer Roads’ cam-paign in 2010 and deployed an upgraded Global Case System for tracking and responding to complaints, where the public can identify Aramex cars and contact us in case of complaints. The system is also used to follow up on noise complaints.

In our efforts for continuous improvement, we have achieved ISO 9001:2008 certification in 28 stations and ISO 14001 certification in eighteen sites.

Additionally, we have maintained certification by the Transport Asset Protection Association (TAPA), which provides rigorous guidelines and assessment crite-ria to ensure that every company meets a specified level of secu-rity, in six of our stations and we aim to obtain this certification for other facilities in our network.

GLOBALCOMPLIANCE

In the pursuit of responsible, prof-itable growth, Aramex remains wholly committed to compliance with local and international laws, regulations and standards. We seek to propel our ongoing efforts in the areas of policymaking, social activism and organiza-tional improvement by pursuing best practices in:

• Stakeholder engagement • Financial reporting• Anti-corruption measures• Human rights • Labor rights• Environmental impact mitigation

In developing and nurturing our corporate culture, we follow the AccountAbility(AA1000)Stake-holder Engagement Standard, which advocates the principles of inclusivity, materiality and responsiveness. Aramex’s open-door policy and firm belief in inclusivity encourages and facili-tates collective decision making. We actively encourage engage-ment with investors, customers, suppliers, employees and the broader community through our online portals, which act as a forum for multi-stakeholder com-munication. We judge our success based on the principle of respon-siveness — our ability to address


27

stakeholder concerns through policy making and the implemen-tation of community and environ-mental initiatives.

Financial transparency is a key element of our belief in ethical business practices. Our financial reporting systems are based on the International FinancialReporting Standards (IFRS) and the requirements set forth by the International AccountingStandardsBoard (IASB). We also continue to be involved with the World Economic Forum’s Partner-ing Against Corruption Initiative (PACI), and are developing robust internal controls via our financial policies, code of conduct and recently-launched ethical busi-ness practices training.

As a proud signatory and active supporter of the UnitedNationsGlobalCompact(UNGC), we have embraced and implemented core practices in the areas of anti-corruption, human rights, labor standards and the environment. Throughout our international operations, we remain commit-ted to protecting human rights and respecting labor standards via a human resource govern-ance structure founded on the principles of the United Nation’s InternationalLaborOrganization(ILO).

We have also recently initiated the adoption of the Social Account-ability8000(SA8000)standard, developed by Social Accountabil-ity International for independent auditing and certification of labor

practices. This standard has been deployed through internal organi-zational audits in Egypt, England and Ireland. The outcomes of these efforts have been analyzed and have helped identify focus areas that must be addressed to meet certification requirements.

Aramex is committed to compli-ance with environmental stand-ards throughout its operations. Through our commitment to the United Nations Global Compact, and as highlighted throughout this integrated report, we aspire to become an industry leader in the adoption and propagation of policies that help to build a cleaner and greener planet.


28 A n n u a l R e p o r t | 2 0 1 1

At Aramex, we believe that our stakeholders are our partners. Therefore, a vital element in our sustainability strategy is our commitment to transparent, long-term engagement with a broad spectrum of stakeholders.

We communicate with our stake-holders through an open and ongoing dialogue that helps us to better understand their views and to share ours. This process helps us identify issues of concern and challenges and address them

effectively. We view this as an essential part of our decision-making process, resulting in a comprehensive appreciation of the shared challenges facing us and the solutions that are most likely to succeed.

In 2011 we continued to pursue an open dialogue with all our stake-holders, including via a multi-stakeholder engagement con-sultation in Dubai, UAE. Aramex benefited from the wide range of stakeholders involved in this

process, discussing social respon-sibilities, answering queries, and communicating areas of inter-est to participants. This stake-holder engagement exercise will serve to assist us in improving our performance by creating the opportunity for stakeholders to provide valuable input for us to consider when developing and implementing future manage-ment strategies. We will build on this successful event with a larger stakeholder engagement exercise planned for 2012.

STAKEhOLDERENGAGEMENT


29

Our approach was to enable open dialogue through an interactive workshop, thereby allowing us to identify new ideas for social investment, as well as to receive feedback and respond to issues that concern our stakeholders. The workshop was attended by groups representing civil society, government, and business and commerce. It was also attended by representatives from Aramex’s senior management and a third party that facilitated the session and posed a range of assessment questions to capture stakehold-ers’ key perceptions and knowl-edge levels concerning the fol-lowing areas:

• Social investment• Commitment to labor rights and human resources development• Employability and ‘base-of- the-pyramid’ approach• Environmental footprint• Product responsibility• Customer rights

The workshop had various out-comes and recommendations that have been identified as important considerations in the design of Aramex’s future sustain-ability and stakeholder engage-ment strategies, including:

• Communicating sustainability initiatives to stakeholders• Using market research to periodically gauge the perception of communities in each social investment project• Engaging employees in decision-making related to CSR• Raising the internal awareness of employees regarding CSR issues

In response to the focus areas identified by the workshop, we sought to improve our perfor-mance in 2011 by:

• Enriching our induction programs through the introduction of more sustainability awareness material• Increasing our engagement activities in the region to better communicate our strategy and achievements• Preparing the first impact assessment report on our Ruwwad project

We also continued to focus on enhancing our traditional stake-holder engagement processes during 2011 with the integration of online portals and social media outlets. By adopting effective reporting of our performance in key areas, and opening enhanced channels of dialogue and com-munication, we hope to further align our business practices with stakeholders’ needs and aspirations.

The following table provides an overview of Aramex’s main stake-holders and the processes, priori-ties and outcomes of our engage-ment with each group.


30 A n n u a l R e p o r t | 2 0 1 1

EMPLOYEES ENGAGEMENTPROCESSES

Our diverse workforce comprises

over 9,500 direct employees and

around 1,600 indirect employees

across the globe; this year Aramex

acquired new companies in Asia

and Africa, further enriching the

diversity of our employees1.

• Operational meetings

• Station meetings, functional meetings and regional meetings

• Team brainstorming sessions

• Individual performance appraisals

• Internal surveys

• Employee social events

• Employee satisfaction survey

• Management retreats

• Annual leaders’ conferences

• Online communications (social media, email shots, video channels)

• Internal collaboration tools

• Training, education and workshops

PRIORITIES

• Development through internal training, executive education and workshops

• Knowledge sharing

• Empowerment and ownership of work

• Performance-based progression opportunities

• Healthy work environment

• Maintaining strong corporate culture, values and reputation

• Job security and safety

• Competitive salary and benefits

EFFORTSANDOUTCOMES

• Feedback-based enhancements to the Aramex Corporate University to improve the

quality and effectiveness of training and career development

• Conducted an independent and comprehensive employee satisfaction survey

• Continued the Global Change Leaders’ program, a 12-month process to empower and

nurture senior managers, with the aim of creating the global leaders of tomorrow

• Celebrated our frontline employees in ‘Aramex Courier Day’

• Regional leaders’ meetings held in various areas of operation

• Organized sports events, such as the Aramex Gulf Cup soccer tournament and Jordan

Football Championship

• Internal promotion of several regional and national managers

CUSTOMERS ENGAGEMENTPROCESSES

We serve over 60,000 customers

spanning the Middle East and

North Africa, Europe, Asia, and

North America. 1

1 Excluding Shop and Ship

customers

• Personal feedback meetings

• Online communication channels, such as social media and live chat

• Branches and outlets

• Contact centers

• Customer service surveys

• Stakeholder engagement event in Dubai

PRIORITIES

• Provision of customized services that cater to customers’ needs

• High-quality service and responsive customer support

• Cost-effective solutions that offer competitive value for money

• On-time delivery

• Safety and privacy

EFFORTSANDOUTCOMES

• Enhancements to the customer complaint system to drive ongoing operational

improvements

• Roll out the Global Case system to most locations

• Enhanced customer service through social media, web and desktop tools, iPhone

application, and live chat

• Continued deployment of a state-of-the-art Aramex Contact Center system that

centralizes communications, provides automated integration with the global

customer database, and logs workflow activity for quality analysis and assurance

purposes

• Continue the customer service training of our frontline employees (around 3,500

ground couriers were trained in 2011)


31

BUSINESSPARTNERS ENGAGEMENTPROCESSES

Our partners include airlines, sea

cargo carriers, vehicle leasing

companies, subcontractors, and

NGOs.

• Ongoing negotiations, transactions and service provision

PRIORITIES

• Long-term business relationships with Aramex

• Accessibility to new business ventures with Aramex

• Providing increasing value to partners

• Preservation of ethical values

EFFORTSANDOUTCOMES

• Maintenance of open communication channels that support compatible operational

standards

• Provision of logistical support to NGOs

• Annual General Meetings to actively engage partners in the World Freight Alliance

(WFA) and the Global Distribution Alliance (GDA)

• Support for SMEs and entrepreneurs

• Development of Supplier evaluation form for implementation in 2012

ShAREhOLDERS ENGAGEMENTPROCESSES

As of 2011 year end, Aramex had

25,207 shareholders, with the

largest individual shareholder

owning less than 10% and

institutional investors holding

approximately 46% ownership.

• Annual General Meetings

• Annual Reports

• Quarterly Earnings Reports

• Press releases

• Online section for ‘Investor Relations’

• Direct contact through the Investor Relations Office

PRIORITIES

• Above average return on investments

• Effective and efficient governance

• Outstanding corporate reputation and brand

• Sustainable and long-term growth

• High integrity and transparency

EFFORTSANDOUTCOMES

• Consistent shareholder engagement through investor calls and meetings

• Sustained profitability and growth through 2011

• Sound business integrity

COMM ENGAGEMENTPROCESSES

The broader society to which

Aramex services and connections

extend.

• Direct and indirect feedback from local communities, customers, employees, and their

families

• Attendance of several events to spread awareness of the importance of civic

engagement in the region

• Participation and investment in community events to address specific community

issues (such as noise pollution, traffic congestion, and road safety)

• Partnering with national sports organizations to promote various sporting activities

• Expanding our Ruwwad model to other geographic areas

PRIORITIES

• Remaining an engaged and proactive corporate citizen by creating shared values,

responding to community needs, forging partnerships to address challenges and

contributing to development

• Job creation, local hiring and competitive wages

• Disaster response and facilitating individual contributions towards disaster relief

• Noise management

• Road safety and traffic reduction

• Inclusion of marginalized communities


32 A n n u a l R e p o r t | 2 0 1 1

EFFORTSANDOUTCOMES

• Direct community engagement via major initiatives such as our partnership with

Ruwwad for Development

• Expansion of community activism in the emerging markets of India, Sri Lanka,

Palestine, Lebanon and Egypt, among other countries

• Continued our successful partnership with INJAZ al-Arab in ten countries and with

INJAZ Gaza to provide local schools and universities with volunteers from Aramex

employees in the region

• Utilization of Aramex’s logistics network for emergency relief efforts in Libya

• Encouragement and support of employee volunteerism and fundraising efforts

through partnerships such as the Ruwwad enrichment programs, and Volunteer in

Dubai (VID)

• Supporting entrepreneurship through partnerships such as WAMDA and MIT

• Expand the Ruwwad model in both Egypt and Palestine and launch the process for

Lebanon

• Identify new partners in the areas where we have launched new operations

• Partnerships with local traffic authorities to train our couriers in road safety

• Design and deliver enrichment programs in partnership with Ruwwad Jordan

ThEENVIRONMENT ENGAGEMENTPROCESSES

Those NGOs and other

environmental stakeholders who

act on behalf of future generations.

• Internal environmental training and awareness campaigns

• Ongoing communication with NGOs to proactively respond to any concerns or

inquiries

• Collaboration with institutions and networks with a focus on the environment

• Use of Aramex premises as a training model for environmental organizations

• Production of the first Aramex carbon footprint report

PRIORITIES

• Increased environmental awareness

• Carbon footprint reduction

• Green Building operation

• Regulatory compliance

EFFORTSANDOUTCOMES

• Continued support for the Arab Forum for Environmental Development (AFED)

magazine

• Introduction of alternative technologies in our ground transportation fleet – including

hybrid electric and battery operated scooters

• Intensified pursuit of environmental compliance standards such as LEED for newly

constructed logistics centers, and ISO14001 certification for 10 new stations

• Continued tree planting efforts in Lebanon and Jordan

• Continued our successful partnership with Purdue University to support Master’s level

students in Jordan, Lebanon and Palestine

• Begin a pilot for testing bio-diesel in our Dubai operations

• Test different means of reducing fuel consumption


33

We view our people as our most valuable asset, and a primary reason for our continuous growth and success. Our peoples’ talent and endless passion has enabled us, over the years, to be flexible, creative and innovative and we firmly believe that investing in our human resources will drive the sustained and long-term growth of Aramex.

In 2011, we expanded our work-force by 10%, thanks to our acqui-sition of new companies in both

Asia and Africa, and to further business growth in our existing locations. Throughout the year, we have continued to improve the quality of our employee training programs by revamping some of our training material and introducing new aspects to both basic training for new employees and enrichment programs for our existing staff. Our company strat-egy is to retain all the staff of the companies we acquire, most of whom are local people.

OURPEOPLE

Others 25%

Bangladesh 2%

Saudi Arabia 2%Sri Lanka 3%

Lebanon 4%

Philippines 4%

Pakistan 7%Jordan 13%

Egypt 16%

India 25%

Employees by Nationality


34 A n n u a l R e p o r t | 2 0 1 1

We are proud of our employee diversity, and count more than 80 different nationalities among our workforce.

The percentage of local vs. expa-triate managers in our workforce remains the same as last year, 54% and 46%, respectively.

Our business continues to expand year on year, as does our work-force; the graph below shows the increase in both our direct and

indirect employees over the past three years.

Our recruitment process is based on qualifications and passing certain exams; we also do several interviews before we decide on the employment. In addition, our human resource governance structure is founded on the prin-ciples set forth by the United Nation’s International Labor Organization (ILO)

We employ a diverse range of people from different age groups, with 81% of our workforce aged 18 to 40 years old. We are proud of the fact that 41% of our present employees have been with us for more than five years. Last year we expanded the number of our direct employees by a further 9.5%, and succeeded in increas-ing the proportion of our female employees, who now account

for an impressive 12% of our workforce. Training hours per employee this year, excluding Ground Couri-ers, totaled 20 hours. Training received by our Ground Couri-ers and indirect employees was combined this year, and averaged eight hours.This year we conducted an employee satisfaction survey of all our employees in collabora-tion with the Hay Group. The 65 questions posed by the survey were grouped into 16 separate “dimensions”; these are listed on the left of the figure below, while the related results of each dimension (percentage of favora-ble answers) appear on the right, alongside a comparison to the Hay Groups’ High Performance (HP) benchmark; a global indica-tor based on some of the world’s most admired companies.

Aramex scored 11% higher than the Hay Group benchmark, which is updated each year and com-prises companies that achieve sustainable business perfor-mance and return on investment over multiple years by success-fully engaging and motivating their employees.

Expats 46%Locals 54%

Managers: Locals vs Expatriates

8101

8675

9500

6232009

2010

2011

995

1627

Indirect Employees Direct Employees

Direct Employees vs Indirect Employees

0 2000

4000

6000

8000

1000

0

Gender per region

Male Female

0 1000

2000

3000

4000

5000

6000

7000

8000

7165

841

382

185

792

135

ME,G

CC,

Africa

EU &

NA

Asia


35

Our employees received USD 182.795 million in salaries and other benefits during 2011, while USD 4.1 million was paid out in the form of local taxes to support local development in the coun-tries in which we operate.

We provide our employees with compensation and benefits that are competitive within our indus-try and are continuously com-pared against other employers in the markets where we operate. Through this process, we aim to meet and exceed local standards; for example, entry-level salary identified by the Jordan Engi-neers Association is 350 JOD, while the entry-level salary for all of our employees in Jordan is 400 JOD.

We work according to local labor laws and national social security laws which govern employees’ retirement benefits, and always comply with local laws and regulations when it comes to our salaries; indeed, we adhere to minimum wage requirements in all of the countries in which we operate, and in most we exceed them. We also provide our

employees with health insurance policies and in some countries, such as Jordan, we provide addi-tional cover for diseases includ-ing cancer.

Aramex always seeks to ensure that our full-time employees receive the benefits they are enti-tled to under local labor laws. As far as our indirect employees are concerned, however, their ben-efits are provided by their main employers. Meanwhile, for our short-term workers we depend on respected agencies and com-panies that specialize in the tem-porary supply of manpower, thus supporting the continuity and job security of these workers.

We do not operate any policy that prohibits freedom of association, collective bargaining, or member-ship of labor unions. Two years ago, our employees in Bahrain formed an Aramex labor union, and in Jordan all the engineers and

lawyers we employ are members of labor unions. However, in some countries where we operate, unions are either illegal or inac-tive. Ultimately, Aramex respects all collective actions taken by employees and ensures that their needs are satisfied. Furthermore, we seek to involve our employees in our decision-making processes, regularly engaging with them via team meetings, and through our intranet service and messaging system.

We encourage the development of our employees by delivering training programs to improve their skills, providing valuable experiences they will continue to benefit from even after they retire or leave the company for careers outside Aramex. For example, through our Global Change Leaders program we sent Aramex participants for three weeks of training at some of the world’s best business schools in 2011; we also maintain a train-ing program with the American University of Beirut that 24 of our Middle Management benefitted from in the past year.

As part of our HR policy, each employee receives two perfor-mance evaluations each year, while managers and higher-level management undergo this process once per year. The purpose of these evaluations is to establish and agree on employ-ees’ plans for the coming period, assess their performance to date, and set their training calendar for the period ahead.

Training on our code of conduct is delivered as part of our induc-tion program, and parts of the code are also featured in the employee handbook. In 2012 we aim to conduct broader training on the code, and are in contact with international organizations to provide labor and human rights training for our employees. Fur-thermore, all our security person-nel receive special training on Aramex policies and procedures, including those related to human and labor rights.

Our HR policies and our code of conduct serve as a platform for eliminating all kinds of

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89

89

86

85

82

82

82

82

80

80

79

78

78

78

75

65

Customers

Quality

Strategy and direction

Work process

Enablement

Leadership

Teamwork

Performance

Information and resources

Respect and recognition

Authority and empowerment

Engagement

CSR

Training

Development

Reward

Celebrating our couriers in Cyprus

Key findings of the Employee Satisfaction Survey conducted by Aramex in 2011


36 A n n u a l R e p o r t | 2 0 1 1

discrimination. We also have a grievance committee in each office that allows employees to report any violations to their human or labor rights. No cases of discrimination were reported in 2011.

The Aramex employment policy states that we only employ people who have completed high school. Aside from in Saudi Arabia where we employ two 17-year-old individuals, the rest of our global workforce is aged 18 and above.

To create a healthy work–life balance Aramex provides flexible working hours for mothers with newborn babies, and most of our female employees return to work after taking maternity leave.

Most of our employees are located in urban areas where communications are always avail-able; we have some truck drivers most of which are subcontracted; who travel across boarders; for those also the mobile phone are available

We remain committed to all national and international labor laws and regulations including

those specified by the UN Global Compact (UNGC) and the Interna-tional Labor Organization (ILO). Also, our internal audit team runs annual audits on all Aramex facili-ties to ensure the correct proce-dures and policies are followed, and we are currently developing an audit mechanism for human and labor rights that will be implemented in 2012.

hEALTh,SAFETYANDSECURITY

Part of the commitment we make to our people is our pledge to ensure a healthy, safe, and secure working environment for all our employees. Our expanding adher-ence to the Occupational Health & Safety Advisory Services’ (OHSAS) 18001 management standard has resulted in fifteen of our stations across Europe and the Middle East receiving certifi-cation. OHSAS 18001 guarantees the highest levels of health and safety within the workplace, and covers all employee health and safety concerns.

Aramex did not experience any non-compliance issues with local or international regulators during

2011, largely as a result of our continuing commitment to ensur-ing compliance in all aspects of our operations. We have suc-ceeded in achieving certification at two additional stations during 2011, are pursuing certification in a further six new stations in 2012, and shall continue to strictly adhere to OHSAS in other regions to ensure the consistent implementation of these stand-ards across our network.

We continue to deliver job-specific awareness training programs to new employees and existing staff to prevent work-related injuries. These courses include general health and safety guidelines, as well as elements that focus on specific areas such as safe driving and maintaining a healthy back.

We meticulously log all health and safety incidents in order to accu-rately gauge our performance and guide ongoing improvement efforts.


37

hEALThANDSAFETYSUMMARY 2009 2010 2011

Fatalities 0 2 0

Accidents per million shipments 20 14.3 12.3

Percentage change in accidents per million shipments -28% -21% -14%

Lost Time Injuries per million shipments (days) 1.72 2.6 6.7

Lost Time Injuries Frequency Rate 0.51 0.41 0.33

This year we experienced zero fatalities across our entire network, while the frequency of accidents per million shipments decreased to 12.3 from 14.3 in 2010.

Being none assets based company and not operating our own planes; vessels; we never had any incident of ships being held by ports authorities

NORMALIzINGINDICATORS 2009 2010 2011

Total Shipments 25,455,130 29,797,799 31,196,164

Total lost time (days) 591 577 432

Total Lost Time Injuries 54 28 39

Total working hours across the network 17,303,736 18,506,304 20,292,000

Total working days 2,162,967 2,313,288 2,536,500

Our ongoing training programs have resulted in an improvement in certain indicators, and we have now expanded our role-specific training to include all functions. We have also teamed up with local traffic authorities in some of the countries in which we operate to deliver safe driver training to our employees.

VEhICLERELATEDINCIDENTS2009 2010 2011

Vehicle Lost Time (days) 323 426 385

Vehicle Accidents (resulting in injury) 34 13 26

Vehicle Accidents (no injury) 403 413 359

Vehicle Lost Time Injuries 44 76 208

Although we have increased our number of operating warehouses this year by opening more than 15 new facilities, we have simultaneously managed to improve upon our low rate of warehouse-related accidents.

WAREhOUSERELATEDINCIDENTS 2009 2010 2011

Warehouse lost time (days) 139 151 47

Warehouse Accidents (no injury/minor injury) 20 55 34

Warehouse Accidents (resulting in Lost Time Injuries) 10 15 13

Lost time per million shipments 15 5 2

Lost time/total time 0.023% 0.025% 0.019%

We continue to maintain the highest levels of physical security by implementing new procedures, empow-ering security officers, and providing staff with the proper tools, equipment and training to ensure their personal safety. Furthermore, we provide all our employees with health insurance policies, and in some countries – such as Jordan – we also provide additional cover for diseases including cancer, though this is not an explicit requirement of any current union agreements.

The statistics covering the last three years are summarized below:


38 A n n u a l R e p o r t | 2 0 1 1

We are dedicated to our cus-tomers, and believe that close engagement with our clients is essential in order to continue delivering high quality services and innovative products to satisfy their needs. To this end, during 2011 we have continued to work on streamlining our cus-tomer feedback mechanisms to reduce the time it takes to respond effectively to customer concerns. Our activities this year included the following projects

designed to support our custom-ers and improve our customer service:

1- Deployment of the Reach system (Aramex’s Customer Rela-tionship Management system) has now begun, and the system has been rolled out across key countries of our network, cover-ing over 60,000 customer records. The system supports a compre-hensive customer management approach by providing our team

members with a holistic view of all customers’ interactions with Aramex, including their profiles, transaction histories, and con-cerns and issues.

2- Our Value Express service has been one of the most popular offerings among our custom-ers. During 2011 we expanded the service in order to benefit a larger number of locations and users. This reflects our desire to be responsive to our customers’

OURCUSTOMERS


39

evolving needs by offering the most cost effective services and providing them with a competi-tive advantage in their respective markets.

3- We have sought to place emphasis on e-commerce enable-ment and development during 2011 by partnering with technol-ogy providers, offering a Cash-on-Delivery service in countries where credit cards are not widely used, and developing residential address delivery services.

4- As part of our ongoing support for entrepreneurs, start-ups, and small and medium-sized

enterprises (SMEs), we have designed a special SME product offering to help these customers grow their businesses and gain a competitive edge in their respec-tive markets.

5- We continued to enhance our GCS (Global Case System) and implement it across the whole of our network in 2011, further facilitating our customer feed-back and response capabilities. The system was first developed in 2010, and now covers most of our operations around the world.

6- We continue to provide cus-tomer service training for our frontline employees, including our call center staff, customer man-agement teams, and customer service teams. Our frontline employees are the primary point of contact with our customers, so providing them with the requisite skills and tools to conduct their work efficiently is a priority. We conducted training for more than

1,100 frontline employees across our network in 2011, honing their basic customer service, commu-nication, telephone handling, and time management skills. Prepara-tions are underway to conduct a similar program for our couriers in 2012.

7- Our Shop and Ship customers appreciate being able to access up-to-date information on their shipments online. Therefore, as part of our vision to increase interaction with clients, we have

Our recently launched Call Center in Saudi Arabia


40 A n n u a l R e p o r t | 2 0 1 1

expanded the geographical imple-mentation of our Shop and Ship live chat system, enabling more online clients to interact directly with our customer service teams and obtain information whenever they need it.

8- In order to further improve our sales and customer service functions, we have implemented a new Point of Sale system at our reception desks. This enables our front desk employees to process customer requests faster, and provides an integrated picture of our interaction with clients, even for walk-ins or irregular customers.

9- We have moved aggressively this year to recruit new custom-ers, while maintaining our exist-ing customer base, as illustrated in the graph above.

10- The graph below shows how our online users have grown over the past four years. The number of Aramex online users grew to 240,058 from 202,502 during 2011, facilitating more efficient customer service through online

information access, and reduc-ing the load on customer service agents, thereby enabling them to deal with the more time-consum-ing customer requests.

During 2011 we conducted a survey to record weaknesses in our service identified by our cus-tomers, with a view to enhanc-ing our customer service and operations processes to better satisfy their needs and expecta-tions. Having our team members visit our clients according to the frequency of their use of our ser-vices allows us to identify impor-tant issues related to customer satisfaction early in the process and work toward resolving them.Although we believe that our reputation is developed most

effectively through direct inter-action with customers, we do advertise sparingly and in full compliance with local and inter-national laws. When supporting events and initiatives, we always aim to establish ourselves as

active partners, rather than as sponsors or donors. When we do come across sponsorship oppor-tunities, they are evaluated by our sustainability council in accordance with our sustain-ability guidelines to ensure that they do not contravene company policies.

We did not face any national or international non-compliance issues with respect to our mar-keting activities in 2011. Nor did we receive any reported com-plaints from customers regarding the privacy of their information, thanks to our code of ethics and information security policy, both of which guarantee that customer information always remains highly secure.

Customer Retention

5 years& above

4 years 3 years 2 years 1 years

0 5 10 15 20 25 30 35 40

7%

38%

11%

15%

29%

Percentage increase in the total number of online users

27%

30%

19%

2009 2010 2011

0 5 10 15 20 25 30


41

Since releasing our first Sustain-ability Report in 2006, we have maintained a comprehensive framework for the planning, execution, monitoring, reporting, and ongoing improvement of our efforts towards sustainability. This framework serves as a plat-form for our partnership model and helps us maintain consistent engagement on a broad range of issues.

Our sustainability focus areas include:

• Education and Youth Empowerment• Entrepreneurship• Community Development• Emergency Relief• Sports• Environment

Our long-standing support of the Ruwwad program remains at the forefront of our community development efforts. This private sector-led regional initiative, co-founded by Aramex, empow-ers disadvantaged communities

to overcome marginalization through youth activism, civic engagement, and education.

Over the years, Aramex has worked closely with Ruwwad in the development of its internal organizational systems, par-ticularly in the departments of Finance, Marketing, Auditing, Human Resources, and Informa-tion Technology. As a result, the initiative was able to transition to a self-sustaining organiza-tion in 2010, geared towards the

SUSTAINABILITYFOCUSAREAS


42 A n n u a l R e p o r t | 2 0 1 1

long-term empowerment of its stakeholders.

Ruwwad’s goals for 2012 are to deepen its community par-ticipation and engagement by expanding its youth program, and to bolster its efforts toward community development through the empowerment of women. The program also seeks to improve communication with stakehold-ers, maximize accountability, and achieve further implementation of robust monitoring and evalua-tion systems covering its various initiatives and activities.

We remain active members in a number of different initiatives regionally and globally; including the UNGC anti-bribery and corrup-tion; the World Economic Forum PACI initiative; the Pearl initiative in the GCC and others. We have started operations in 10 new warehouse facilities across the globe in 2011, which provided hundreds of job opportunities in the respective countries. We also continued our engagement with the local communities in the countries we operate in through

continued support to entrepre-neurs (refer to the Entrepreneurs section), support for youth empowerment and education efforts through the provision of much needed skills to the youth, and the support of more than 300 youth in their university educa-tion. In addition, we rolled out several campaigns to support education, including the 6 minutes campaign aimed at cre-ating a community of readers, in Ruwwad Jordan (refer to the Com-munity Development section)

This section is designed to high-light the various challenges and

successes, as pertaining to the individual sustainability focus areas.

EDUCATIONANDYOUThEMPOWERMENT

At Aramex we believe that the education and empowerment of a country’s youth represents the key to the development of a pros-perous and sustainable society. To this end, we continue to par-ticipate in a variety of initiatives that educate and empower young people to take advantage of development opportunities that allow them to support the growth and prosperity of their local com-munities. Throughout 2011, our educational and youth empower-ment activities across the Middle East and South-East Asia com-prised the following initiatives:

RegionalWe continue work with INJAZ al-Arab across the region, sup-porting the worthy goals of this program by providing volunteers in local schools and universities. This marked the second year of our three-year commitment to supporting the INJAZ initiative in Gaza, and our employees continue

Graduation of the Mousab Khorma Youth Scholarship Fund in 2011

Opening of the library, in the Nahr-Albared refugee camp in Lebanon


43

to volunteer for INJAZ initiatives around the world, from Jordan and Saudi Arabia to Bahrain and Morocco.

Meanwhile, in Saudi Arabia we supported INJAZ’s ‘CEO of the Year,’ competition, and in Jordan, Palestine and Lebanon we assisted Purdue University with three projects to support local communities, bringing together Purdue scholars and students, local university profes-sors, and NGOs representing local communities.

India• We have introduced a program to provide private school education for the children of our ground couriers, inducting more than 70 children into the program to date. • We are currently supporting the education of two postgraduate students.

JordanOur ongoing efforts towards edu-cating and empowering Jordanian youth continued through 2011, and included:

• Further support for the Industrial Engineering faculty at the University of Jordan, assisting students with their graduation projects and building on the support Aramex provided in 2010. • Holding a regional robotics competition to encourage the pursuit of science and innovation among young people.

• Aramex Jordan continued to support the Erada initiative, with its employees

renovating facilities in two schools in the Jabal Al-Nathief area of Amman and providing them with the necessary material to run their education programs. This project is serving as a prototype to encourage other private sector companies to support education.• Aramex also supported school students in building a robotics lab in Tafileh, Jordan.

PalestineIn 2011 Aramex continued to assist student-to-student initia-tives by supporting 20 students through their university studies in Palestine. The scheme provides support that is conditional upon each student agreeing to home-school five students in return for their scholarships. Therefore, by supporting 20 individuals, the initiative ultimately secures the education of 100 students.

We have begun the establishment of Ruwwad in Budrus, a small village in the north of Palestine. In the initial phase of the project, we have supported 27 students, raising the total combined number of students supported in Palestine to 47 in 2011.

Nasma: We continued to support the children’s library and com-puter center in the Ras-Beirut area of Lebanon during 2011. As part of this initiative, Aramex employees volunteer in the center, teaching the children and passing on their experience. We have also covered the full oper-ating costs of the center for the second year running.

Nahr-Albared Camp Library:We have opened a library in the

Nahr-Albared Refugee camp in Lebanon, in partnership with the United Nations Relief and Works Agency (UNRWA). Our employ-ees volunteer in this library, and our plan is to create a computer center and vocational training center in the area to help young people gain the requisite skills to find suitable employment.

PurdueUniversity:For the second year running, we have partnered with Purdue University to support research projects in the region. The three projects – in Jordan (Ruwwad), Palestine and Lebanon – seek to benefit local communi-ties, and involve collaboration between professors and students of Purdue and local universities in each country. The results of the research will be translated into an on-the-ground project designed to benefit local communities.

ENTREPRENEURShIP

We continue to leverage our knowledge, resources and exper-tise to encourage and empower the business leaders of tomor-row. The Entrepreneurial Unit at Aramex, established in 2010, coordinates a variety of activities to support entrepreneurs across the region by facilitating their growth and development via our networks and contacts. We also support intrapreneurship within the company. Some notable examples of the support we pro-vided in 2011 include:

Affiliation with the MIT Enterprise Forum of the Pan Arab Region

The MIT Arab Business Plan Com-petition, organized by the MIT Enterprise Forum of the Pan Arab Region, is designed to promote


44 A n n u a l R e p o r t | 2 0 1 1

entrepreneurship in the Arab world by encouraging enterpris-ing individuals in the region to launch their own businesses and, ultimately, create a collection of leading firms across the region. The scheme (www.mitarabcom-petition.com) is modeled around the MIT $100K Entrepreneurship Competition that runs annually in the United States.

In 2011, the competition received over 3,800 registrations from 18 Arab countries—the highest number recorded since its launch in 2006, and representing a 100% increase in the number of regis-trations from the previous year. Aramex played its part in this dramatic rise in applications by assisting in the marketing and promotion of the competition. In addition, six of our employees have been nominated as jurors.

Aramex offered to mentor the 30 semi-finalists from the com-petition, giving them guidance on their projects and providing access to relevant contacts. Furthermore, the Entrepreneurial Unit has been conducting one-on-one meetings with past semi-finalists, helping to analyze their circumstances and create a framework for their further development. We also offer semi-finalists special prices for our ser-vices, as we do for startups and entrepreneurs across the region.

Oasis500

Oasis500 is a mentorship-driven entrepreneurship training and seed/early-stage investment program, providing first-rate technology startups with rare opportunities in the region. The Aramex Entrepreneurial Unit

provides guidance and assis-tance to the participants of Oasis500. In 2011, this included introducing entrepreneurs to the Oasis500 program; participation in the selection committee and jury; and providing mentorship, networking opportunities, strate-gic and managerial support, and introductions to facilitate angel funding.

Aramex has also supported the following organizations and initiatives:

• Bedaya Angel Network, in Jordan• Start Alliance (mapping the Jordanian entrepreneurial ecosystem), in Jordan• Amman Tech Tuesdays, in Jordan• Mowgli Foundation, in Jordan• ArabNet, in Lebanon• Start-up Weekend Dubai, in the United Arab Emirates• Case Studies conducted with the El-Khazindar Business Research and Case Center at the American University in Cairo, in Egypt• King Abdullah University of Science and Technology (KAUST), in Saudi Arabia• Aramex CEO of the year prize,

at INJAZ Saudi Arabia’s 2011 FIKRA competition.

COMMUNITYDEVELOPMENT

Our community-focused ini-tiatives are designed to support sustainable long-term develop-ment in the countries in which we operate. As well as ensuring that none of our activities negatively affects the local people, we aim to have a positive impact on their communities through job crea-tion, education and the resolution

of local social issues.Our initiatives seek to provide skills to local people, thereby empowering communities to face challenges such as employability. A prime example is our support for Ruwwad students; their degrees open doors to meaning-ful employment opportunities, and allowing them to give back to their communities.

All operations across our network are encouraged to implement community initiatives that fall under one of the six categories presented in our sustainability guidelines, and each office allo-cates one percent of its annual pre-tax profits to such projects.

During 2011, we have been involved in the following pro-grams and initiatives across our global network:

Ruwwad: Thanks to the support of Aramex and other private sector companies, the Arab Foun-dation for Sustainable Develop-ment (Ruwwad) has enjoyed six years of successful operation, and can boast the following achievements:

• Since its inception in 2005, 659 students have benefited from the Mousab Khorma Youth Education and EmpowermentFund, one of the cornerstone projects

Ruwwad celebrates its people, community members, partners and supporters through Ruwwad Day.


45

of Ruwwad. In 2011 around 180 students; educationwas facilitated by the fund.

• More than 3,000 students have attended Dardashat Cultural Program sessions, with more than 200 students attending the business skills modules conducted by volunteers from Aramex and Abraaj Capital. • Ruwwad’s IT lab is visited by over 200 people each week, and 49 students have successfully graduated from the lab’s various IT courses. • In 2011 Ruwwad launched a campaign to create a community of readers, comprising mothers, fathers, teachers, principals, children, adolescents and young people in general. Thus far, over 4,500 participants have pledged to read alone or collectively, and this figure is expected to exceed 5,000 in the first quarter of 2012. • Through its volunteering program, Ruwwad contributed 34,320 hours of community work in 2011, including those committed by the university students who receive education support from Ruwwad. • At the community level, Ruwwad is running several programs targeting women, adolescents and families. In the past year, 165 families received direct in-kind donations; 426 adolescents benefited from psychosocial support programs; 100 women undertook special women’s education programs; and more than 340 legal cases and 500 consultations where handled through the support provided by the

Ruwwad legal office. • In terms of its support for young people in 2011, 200 children and adolescents participated in Ruwwad’s sports programs; 450 students benefited from its school outreach programs; 450 undertook Ruwwad extracurricular activities; and 150 received academic support.• In cooperation with Ruwwad, Aramex volunteers in Jordan initiated a comprehensive training program for univer sity students, covering communication skills, business ethics, and customer service.

AFEDSupport: Aramex continues to support the Arab Forum for Environment and Development (AFED), which seeks to broaden the environmental awareness of people and communities across the region.

Memorandum of Coopera-tion between Aramex and theMajid Society: During 2011 Aramex signed a Memorandum

of Understanding with the Majid Society, based in Jeddah, Saudi Arabia. The agreement will see the start of a new partnership, working toward the establish-ment of various CSR projects in Jeddah. The first project in the pipeline is the creation of a library in Amira Park to serve under-privi-leged children in the area.

Sponsorship of the AUB Volun-teerFair: As part of our ongoing cooperation with the American University of Beirut (AUB), in 2011 we sponsored a volunteer fair organized by AUB to help promote volunteering in Lebanon

Safi Crafts Project: This com-munity empowerment project in Jordan allows us to lend our support handicraft expertise, providing to local women in the Al-Safi area with training on the production of locally made handi-crafts, and assistance in market-ing their products in different areas of the country.

MoUwithUNICEF Egypt: During 2011 we continued to provide support to the United Nations

The memorandum of Understanding signed by Prince Nawaf bin Faisal bin Fahd bin Abdulaziz, the President of Youth Welfare, who is also Chairman of the Board of Directors for the Disabled and Chairman of the Board of Directors of Professionals League Commission, and Hussein Hachem, Aramex CEO in Middle East and Africa


46 A n n u a l R e p o r t | 2 0 1 1

Children’s Fund (UNICEF) in Egypt by finalizing the provision of computer centers to UNICEF-sup-ported non-governmental organi-zations (NGOs). This project seeks to benefit both the NGOs them-selves and the local communities they serve by familiarizing them with the usage of computing technology. Besides purchasing the equipment, our IT team trav-elled to all the centers to install the computers and train local people in the area to use them.

Supporting Polio Vaccination inEgypt: We have also partnered with UNICEF in Egypt to support their Polio vaccination campaign, both by providing logistical support and helping to promote the cause by branding our vehi-cles across Egypt with the cam-paign logo.

EMERGENCYRELIEF

Concerned by the plight of those suffering as a result of civil unrest in Libya, Aramex employ-ees provided generous donations to support relief efforts following the crisis of 2011. Their contri-butions were directed toward assisting people in need via the work of the International Medical Corps (IMC), a global, nonprofit humanitarian organization dedi-cated to saving lives and relieving suffering through its relief and development programs. Aramex

pledged to match each individual charitable contribution made by its employees, thereby doubling the total amount donated to the IMC to support their ongoing efforts in the country.

SPORTS

At Aramex, we draw a direct con-nection between the attributes we value as a company and those embodied by sport, including teamwork, perseverance, agility, and drive. Through our sponsor-ship and support for sporting activities, we seek to improve the lives of those in underprivi-leged areas, and expand extra-curricular opportunities offered at public schools. Furthermore, we strongly encourage sporting activities among our employees, and maintain a number of active and competitive teams.

During 2011, we supported a variety of different activities and organizations, including:

Al-RiyadiSportsClubAramex continues to support the Al-Riyadi Basketball Club, which played in competition finals both in Jordan and at the regional level during 2011. As well as direct financial support, Aramex also provides administrative assis-tance to the club through its management team. Indeed, some of the club’s players and coaches are Aramex employees. Last year the Jordanian telecoms opera-tor Umniah supported the club’s second team—an example of Ara-mex’s commitment to involving other private sector companies in its supportive projects.

MarathonRunnersThis was another successful year

for Aramex’s marathon runners. Salameh Al-Aqra secured first place finishes in Austria and Cyprus, and came second in the grueling Marathon Des-Sables in Morocco, while Mohammad Sweiti came seventh and second in Austria and Cyprus, respectively. Aside from their participation in

both national and international ultra-marathons, our two runners remain committed to provid-ing marathon training for young people from underprivileged areas. For example, in Jordan they train a group of 15 young boys and girls three times a week, facilitat-ing their participation in national marathons. They also offer a mar-athon training program in India by providing annual training to a local coach who trains 15 young girls in an underprivileged area south of Mumbai.

MountaineeringWith the support of Aramex, Leba-nese mountain climber Henry Saliba embarked on a technical mountaineering trip to some of the most challenging peaks of

Mountain climber Henry Saliba in the Alps

Our Marathon Runner, Salameh Al-Aqra, braving the Moroccan desert in Marathon Des-Sables

Branding of Aramex vehicle for the UNICEF Egypt Polio Campaign


47

the Alps with the aim of promot-ing the sport in the Middle East. His successful climbs, which took place between the 19th and 25th of June, 2011, entailed challeng-ing technical routes only acces-sible via rope work, and com-prised the peaks of Aiguille de la Cabane (2,999m), Aiguille d’Orny (3,150m), Tete Biselx (3,509m), and Dent du Geant (Giant’s Tooth, 4,013m).

DevelopingDisabledSportsFacilitiesinSaudiArabiaAramex has signed a Memoran-dum of Understanding (MoU) with the General Presidency of Youth Welfare and the Professional League Commission in Saudi Arabia to develop special needs facilities at football stadiums in Riyadh, Jeddah, and Dammam.

As part of the agreement, Aramex will install state-of-the-art acces-sibility facilities for those with special needs, allowing them to attend the games of the Saudi Professional Football League. The facilities, which will be con-structed in accordance with inter-national standards and safety regulations, will include special viewing terraces manned by a dedicated team of volunteers who will assist disabled specta-tors on match days.

The first location to benefit from these facilities was the King Fahd

International Stadium in Riyadh, while similar upgrades are under evaluation at the Prince Faisal bin Fahd Stadium in Riyadh, the Prince Abdullah Al-Faisal Stadium in Jeddah, and the Prince Mohammed bin Fahd Stadium in Dammam.

ENVIRONMENT

We remain dedicated to mitigat-ing the negative environmental impacts of our operations, and are committed to upholding the highest standards of environ-mental responsibility across our entire global network.

In keeping with our strategic commitment to environmental leadership, we have embraced environmental sustainability as a management imperative, and continue to pursue a variety of environmentally-conscious busi-ness practices throughout our operations, from using biode-gradable plastic in our envelopes and attaining LEED certification at our facilities, to upgrading our fleet to comply with Euro 4 and Euro 5 emissions standards. We also take the utmost care in ensuring our operations do not harm protected species or habi-tats, particularly those covered by the IUCN Red List or other national endangered species reg-isters, and have built a system to monitor all hazardous materials handled by our operations as part of our ISO 14001 certification program.

We strive to operate according to the highest environmental standards and to cut our carbon emissions wherever possible, even when changes in emissions regulations in certain countries present logistical challenges. However, reducing emissions entails inherent difficulties, including the limited availability of suitable mitigation technolo-gies, and regulatory changes that affect our business, such as the carbon tax on airlines heading to and from Europe, the impact of which will likely become notice-able in 2012.

To demonstrate our dedication to upholding the highest stand-ards of environmental aware-ness, and our commitment to the United Nations Global Compact and the AccountAbility material-ity principle, Aramex released its first Carbon Footprint Report in December 2011, providing a comprehensive and transparent review of our emissions.

TheAramexCarbonFootprintReport:OurmethodologyIn order to accurately calculate our emissions, we have used the Greenhouse Gas (GHG) Protocol accounting which is employed by World Business Council for Sus-tainability Development (WBCSD) & World Resources Institute (WRI). A large number of busi-nesses, governments and other organizations worldwide rely on this accounting framework to quantify and reduce their emis-sions. The Protocol comprises three Scopes that break down the various direct and indirect components of a company’s gross emissions:

• Scope 1 – direct emissions

State of the art accessibility facilities in the King Fahd International Stadium in Riyadh, managed by Aramex volunteers


48 A n n u a l R e p o r t | 2 0 1 1

generated by Aramex-owned vehicles

• Scope 2 – indirect emissions generated by electricity. • Scope 3 – indirect emissions from employees’ commutes as well as those physically produced by other organi zations as a consequence of Aramex’s activities.

The carbon footprint data below comprises the second compre-hensive review of our environ-mental impact as a company, building upon the first Aramex Carbon Footprint Report issued in 2011. It has been compiled in accordance with the specific principles contained in the GHG Protocol, namely:

• Relevance: Aramex’s carbon footprint accurately reflects the greenhouse gas emis-sions attributable to the company.

• Completeness: The majority of sources of greenhouse gas emissions and related activi-ties within the organization are reported and accounted for, and any exclusions are fully disclosed and justified.

• Consistency: Consistent methodologies have been developed and employed to allow for meaningful com-parisons of greenhouse gas emissions over time; addi-tional documentation will be provided should any changes

to data, methods, or other relevant factors be necessary in the future.

• Transparency: Greenhouse gas information has been compiled, analyzed and documented clearly and coherently in order to allow

2011 2010

Vehicles Distribution per engine type

0 10 20 30 40 50 60 70 80

EURO

5EU

RO 4

EURO

3EU

RO 2

EURO

1


49

auditors to evaluate its cred-ibility. We have also disclosed relevant assumptions, calculation methodologies,

and data sources. • Accuracy: We are committed to accurately quantifying our greenhouse gas emissions, with conservative assumptions being employed in cases of uncertainty. The data presented is of sufficient accuracy to enable users to make decisions with reasonable assurances as to the integrity of the reported information.

Scope1:Directstationaryandmobileemissions(34,251tCO2e)

Aramex produced 34,251 tons of CO2 equivalent (tCO2e) emissions from fossil fuels in 2011, compris-ing actual CO2 emissions from electricity use, as well CH4 and N2O emissions. These were gen-erated directly by Aramex-man-aged, owned or leased vehicles

that use diesel and all different types of gasoline. The Aramex accounting office supplied the underlying data for these calcu-lations, drawn from information such as fuel and energy consump-tion data from each office in our global network.

We continue to operate and further implement a responsible procurement policy for our global fleet, which imposes the use of fuel-efficient, Low Emission Vehi-cles (LEVs) and alternative tech-nologies in order to reduce our environmental impact in accord-ance with AccountAbility mate-riality principles. During 2011 we continued to upgrade our fleet to attain the highest standards of fuel efficiency. To date, 69% of our fleet complies with the EURO 4 emissions standard and 11% meets the EURO 5 standard.

We use unleaded gasoline in all of our operations, and continue to convert our fleet to use natural gas where available, thereby further reducing our emissions. We have also started experiment-ing with new technologies in the Middle East to lower our fuel consumption. For example, we are piloting the use of bio-diesel in our Dubai operations, a project launched in the third quarter of 2011 with the aim of converting

our entire fleet, depending on availability and supplier approval which would further reduce our emissions.

We have also begun experiment-ing with our first hybrid motor-bikes in the UAE, while in India we continue to upgrade our motor-bikes to electric models. We are also expanding the implementa-tion of the fleet management system across our network, and are seeking to examine the possi-bility of using electric vehicles in Jordan, launching a pilot electric vehicle project to assist the Jor-danian Ministry of Environment to explore their feasibility.

Scope2:Indirectemissions(electricity)(18,644tCO2e)

In 2011, Aramex produced 18,644 tCO2e of emissions from electric-ity generation, comprising actual CO2, emissions derived from electricity use for heating and cooling, lighting, and technology use in our offices and warehouses across the globe. We are working toward implementing the LEED standard that will allow us to cut down our energy usage in all our facilities; and we are experiment-ing with the generation and use of solar energy in some of our facilities to further reduce our emissions. 2011

Emissions fromemployee commuting (TCO2e)

11710

11000 12000 13000

2010

12881

OURCARBONFOOTPRINTScope 1: Direct 34,251 9%

Scope 2: Indirect (electricity) 18,644 5%

Scope 3: Indirect (other) 319,191 86%

Business travel 782

Commuting 12,881

Express shipments 60,959

Freight 244,569

TOTAL(TCO2E) 372,086 100%

Scope 1: Direct stationary and mobile emissions (34,251 tCO2e)


50 A n n u a l R e p o r t | 2 0 1 1

Scope3:Indirectemissions(other)(319,191tCO2e)

Business travel (782 tCO2e)In 2011, Aramex employees gen-erated 782 tCO2e of emissions from business travel. In order to reduce these emissions, we have increased the utilization of video and audio conferencing in our offices to minimize the amount of employee travel required. We are currently in the process of equipping all of our offices with video conferencing capabilities and have so far managed to cut down our business travel down

by 29%, and our resultant emis-sions by around 25%. We are also engaged in transferring aspects of our training to online platforms in order to reduce training-related travel.

Commuting (12,881 tCO2e)Our employees generated 12,881 tCO2e of emissions by commut-ing to and from work in 2011. This figure is based on the results of a survey that asked employees to identify their precise method

of transportation and travel time. The rise in emissions during 2011 was a direct result of a 10% increase in the number of our employees.

Aramex launched an employee training campaign in its main offices in 2011, with a view to reducing the company’s ecologi-cal footprint. The campaign aimed to discourage employee behavior that has a negative impact on the environment by presenting them with ways to minimize their emis-sions at work and at home, and was later extended to include

other stations in the network. At our new facility in Dubai Logis-tics City, we have arranged for busses to take our employees to and from work, dramatically reducing the emissions produced by using their personal vehicles. We have also initiated a bus service to transport employees from the nearest metro station to our new facility and back.

Express shipments and freight consignments (305,528 tCO2e)

In 2011, Aramex shipments and freight consignments pro-duced 305,528 tCO2e of emis-sions, according to calculations based on data obtained from our operations and IT departments. These emissions grew due to the increase of shipments in 2011, changes in the emissions calculation factor for air freight shipments, and the inclusion of new stations in the consolidated data. To reduce these emissions we are utilizing new and improved technology to minimize driving hours, and promoting land freight as an alternative to air and sea transport, as it is significantly cleaner. As of this year, we are also looking to optimize our reli-ance on those suppliers with lower carbon emissions.

Paper consumption and recyclingIn 2011, Aramex saved 75 tons of paper by automating internal processes, enforcing printing restrictions, and encourag-ing increased utilization of our intranet for internal communica-tions. We have also begun using electronic scanners in all of our stations to track shipments and delivery times, and have piloted electronic signature capture technology to further reduce paper consumption across our global network. Our responsible procurement policy requires that all printers must be capable of producing double-sided pages, potentially halving our paper consumption. Also, we have introduced responsible paper practices into our environmental awareness training program, and strongly promote both paperless electronic shipping systems and smaller printed labels among our clients.

0 500

1000

1500

2000

2500

Number of business trips

Emissions from business travel (TCO2e)

Employee Business Travel and Emissions

12132010

2011

2348

782

1663


51

In an effort to increase our recy-cling as an organization, we have introduced a waste management system in 12 of our stations so far. In our offices in Dubai over the second half of the year, we succeeded in recycling around 50 tons of paper, which is equivalent to saving 500 trees from being felled to produce virgin paper. Similar programs are running across our network.

Tree plantingAramex continues to plant trees in its many areas of operation; we have signed an agreement with the Arab Group for the Protection of Nature in Jordan to begin plant-ing in under-privileged areas in the south of the country in order

to benefit NGOs and families in these areas. The purpose of this project is to provide a means of additional income for its benefi-ciaries through cultivation. The first phase will distribute 1,000 olive and other fruit trees in three villages, with the support of local NGOs.

Our facilitiesIn 2011 we achieved ISO 14001 certification at ten new sites, and our plan is to add a further six during 2012. The upgrading of our processes to meet the ISO standard is also helping us to cut down our emissions and reduce our negative impact on the environment. We continue to work toward LEED certification

for our newly built warehouses, and anticipate that three will be certified this year, although the construction of some buildings has been delayed owing to the political unrest in the Middle East and North Africa region.

Water usageWhile it is not possible to measure exactly the waste water we produce (since we often operate from commercial buildings with shared waste water facilities), due to the nature of our opera-tions, water consumption is limited to domestic use, while output is restricted to public sewage systems and does not pose any risk of pollution to local water resources.


52 A n n u a l R e p o r t | 2 0 1 1

REPORTINGPROCESSThis is Aramex’s second Inte-grated Report, combining our financial and non-financial data for the calendar year 2011.

SCOPEOFThEREPORT

Determiningour priority issues: We have reviewed our sustainabil-ity issues using a process con-sistent with the Global Reporting Initiative (GRI) G3.1 Guidelines and its principles for Defining Report Content.

Materiality: We have sought to cover all topics (and to include associated indicators) that would substantively influence the assessments and decisions of stakeholders, providing a wealth of information concerning the organization’s significant eco-nomic, environmental, and social impacts.

These topics include major issues raised by stakeholders and reported on by our peers, under broadly-accepted standards and guidelines including the GRI G3.1 Reporting Guidelines and the GRI Logistics and Transportation Sector Supplement regulations and laws in our countries of oper-ation. They also examine critical factors for enabling success,

including our corporate culture, the state of existing systems within the company, and the potential of our core competen-cies to contribute to sustainable development.

Stakeholderinclusiveness: After careful consideration, we believe that we have accurately identi-fied all of our key stakeholders and have sought to explain the ways in which we engage them, our understanding of their inter-ests and expectations, and the details of our related responses.

Sustainability context:We have examined global trends towards sustainability alongside the regional and local contexts in which we operate, identifying the different priorities among these contexts, and communicat-ing how we have attempted to address these issues from multi-ple perspectives.

EnsuringQuality inourSustain-abilityReporting

We utilize the GRI Reporting Prin-ciples for Defining Quality, includ-ing the following elements:

Balance: We have achieved balance by reporting and

evaluating our performance based on material issues and future targets, presenting both our positive performance as well as focus areas that require improvement and reevaluation.

Comparability: We have provided year-on-year data and followed GRI Indicator Protocols wherever appropriate.

Accuracy: We aim to achieve maximum accuracy in our data, and always clearly identify where estimations or limitations in our published figures exist.

Timeliness: In the past, we reported on our progress via a biennial sustainability report. However, we are now committed to reporting our sustainability performance on an annual basis.

Clarity: Throughout the report, we clearly illustrate our sustainability performance against the targets established by previous reports.

Reliability: This report has undergone third-party assurance, according to the parameters expressed in the assurance statement.


53

TheAramexCarbonFootprintReport

Released for the first time in December 2011 and augmented by this Annual Report, the Aramex Carbon Footprint Report provides a comprehensive and transparent review of our total emissions. In calculating our carbon footprint, we have adhered to the princi-ples contained in the Greenhouse Gas (GHG) Protocol accounting tool employed by World Busi-ness Council for Sustainability Development (WBCSD) & World Resources Institute ( WRI).

ReportingBoundaries

Unless otherwise indicated, the data in this report covers all of our operations in all regions. The only exceptions being our franchise operations; while the financial data presented includes our proceeds from franchises, it does not include human resource data from franchisees. The financial data in this report has been generated using audited figures drawn from our financial

statements, and has undergone third-party verification according to the parameters expressed in the auditor’s statement.

Limitations

In general, Aramex utilizes the services of transportation provid-ers, such as airlines, instead of maintaining heavy assets itself. The company also leases the majority of its vehicles (although it does maintain a small fleet of its own). Aramex also subcon-tracts the pickup and delivery of express packages to local com-panies in certain markets — most notably India.

At present, our fuel consumption calculations (from which emis-sions are derived) include only fuel used for our owned and leased vehicles. They do not include aviation fuel or the consumption of third-party contractors. We understand that this influences our emissions data, and aim to include these third-party sources in our calculations in the coming two years.

DataMeasurementTechniques

Unless otherwise stated, indi-cators provide global coverage, subject to the reporting bounda-ries and limitations outlined above. The precision of different indicators may vary, however; for example, the company already has in place strong management and information systems for financial and human resources data, which leads to greater accuracy in these areas. Data measurement necessarily involves some level of estimation; wherever estima-tions occur, we have provided an explanation, including the level of accuracy and approach to data collection used to produce the relevant indicator.

Feedback

We welcome your feedback and encourage comments from our readers.

Please direct any communication to: [email protected].


54 A n n u a l R e p o r t | 2 0 1 1

GRI/UNGLOBALCOMPACTINDEX

PROFILEDISCLOSURE CROSS-REFERENCE/DIRECTANSWERUNITEDNATIONSGLOBALCOMPACTPRINCIPLES

1.1 P.6

1.2 P. 8,14 P.40

PROFILEDISCLOSURE CROSS-REFERENCE/DIRECTANSWER

2.1 P.8

2.2 P.12-13-14

2.3

aramex is managed by a management team of 17 members 3 of them are regional CEOs 1 for Middle East and 1 for Europe and North America 1 for Asia and the rest are functional. Further information is available on aramex.com

2.4 P.8

2.5 P.12-13-14

2.6 P.8

2.7 P.8, 14

2.8 P.34 P.9-10-11 aramex operates in 58 countries with 300 offices worldwide

2.9 Page 16-17-18

2.10 P.21


3.1 P.1

3.2 2011

3.3 Annual

3.4 [email protected]

3.5 P.52-53

3.6 P.7, P.52-53

3.7 P.52-53

3.8P.58-59-60-61 We report on all our subsidiaries any new acquired company will be reported on in the next reporting period

3.9 P.52-53

3.10 P.52-53

3.11 P.52-53

3.12 P.54-55-56-57

3.13 P.8


4.1 Page 24-25-26

4.2 Page 24-25-26

4.3 Page24

4.4 Page 25

4.5 Page 24-25-26

4.6 Page 24-25-26

4.7 Page 24-25-26

4.8 P.7-8,P.14-15-16-17

4.9 P.7-8

4.10 Page 24-25-26

4.11 Page 24-25-26 Principle 1

4.12 P.11 P.22 P.24-25-26 Principle 1

4.13 P.22-23 Principle 1-2

4.14 P.28-29-30-31

4.15 P.28-29-30-31

4.16 P.28-29-30-31

4.17 P.28-29-30-31


55

STANDARDDISCLOSURESPARTII:DISCLOSURESONMANAGEMENTAPPROACh(DMAS)

G3.1 DMAs Cross-reference/Direct answer

DMAEC

Economic performance P.9-10

Market presence P.8,17

Indirect economic impacts P.41-51

DMAEN

Materials P.47-48-49-50-51

Energy P.47-48-49-50-51

Water P.47-48-49-50-51

Biodiversity P.47-48-49-50-51

Emissions, effluents and waste P.47-48-49-50-51

Products and services P.47-48-49-50-51

Compliance P.47-48-49-50-51

Transport P.47-48-49-50-51

Overall P.47-48-49-50-51

DMALA

Employment P.33-34-35-36-37

Labor/management relations P.33-34-35-36-37

Occupational health and safety P.33-34-35-36-37

Training and education P.33-34-35-36-37

Diversity and equal opportunity P.33-34-35-36-37

Equal remuneration for women and men P.33-34-35-36-37

DMAhR

Investment and procurement practices P.30, 33-34-35-36-37

Non-discrimination P.30, 33-34-35-36-37

Freedom of association and collective bargaining P.30, 33-34-35-36-37

Child labor P.30, 33-34-35-36-37

Prevention of forced and compulsory labor P.30, 33-34-35-36-37

Security practices P.30, 33-34-35-36-37

Indigenous rights P.30, 33-34-35-36-37

Assessment P.30, 33-34-35-36-37

Remediation P.30, 33-34-35-36-37

DMASO

Local communities P.12, 25,44-46

Corruption P.27-28

Public policy P.27-28

Anti-competitive behavior

We follow all the anti-competitive behavior laws in each country we operate in; we did not face any case of anti-competitive behavior and will report in case there is any issue

Compliance P.12, 25,44-46

DMAPR

Customer health and safety

Product and service labelling We follow the international standards for shipment lableing

Marketing communications P.38-39-40

Customer privacy P. 30, 40

Compliance P.27-28

STANDARDDISCLOSURESPARTIII:PERFORMANCEINDICATORS

PERFORMANCEINDICATOR CROSS-REFERENCE/DIRECTANSWER

EC1 P.35

EC2

P.47; since our major carbon footprint (scope 3) is not controlled or manged by us; the areas under our control are managed and we reduce energy as part of our climate change risk mitigation strategy

EC3 P.35

EC4 P.25

EC5 P.35 Principle 6



EC8 P.42

EC9 P.44


56 A n n u a l R e p o r t | 2 0 1 1


EN1 we are not collecting this info on a group level and we will be reporting on that 2012

EN2 we are not collecting this info on a group level and we will be reporting on that 2012

EN3 aramex does not produce any type of energy onsite

EN4 Our energy consumption for 2011 is 26547871 Kw

EN5 The amount is included in the carbon foot print section and in 2011 we implementing energy efficiency solutions and we will report on this in our next report. Our energy consumption during 2011 is 26547871 Kw

Principle 7

EN6 P.47,51 Principle 8

EN7 P.47,51 Principle 8

EN8 The only source of water is municipalities water, our water consumption for 2011 was 93,451 CM

EN9 P.47

EN10

EN11 P.47

EN12 P.47

EN13 P.47

EN14 P.47

EN15 P.47

EN16 P.49

EN17 The other GHG gases are included as part of CO2 Equivalent in the calculation

EN18 P.49-57 Principle 9

EN19 P.49

EN20 Not collected on the group level

EN21 this information on a group level and we start reporting on it

EN22 P.51

EN23 P.51

EN24

EN25

EN26 P.51 Principle 7

EN27 P.56-57 Principle 7

EN28 None and if case we have a case of that we will report on it.

EN29

EN30


LA1 P.33,34

LA2We are working on unifying our systems to accurately calculate turnover in the next 1-2 years; this year we hired 342 females vs. 1705 males

LA3 P.35 Principle 6

LA15 P.35 - We are following the local laws and regulations regarding the maternity leaves and most of our female employees return back to work after the maternity vacation currently we don’t maintain information about returning employees for maternity leaves.

LA4 P.35

LA5 P.35

LA6 P.36

LA7 P.37

LA8 P.35

LA9 P.37

LA10 P.10 - We are not maintaining training information per gender but as per category we do have 20 hours training per office employee and 9 training hours per ground courier.

LA11 P.35-36

LA12 P.36

LA13 P.34

LA14 P.34 Principle 6


57


HR1 P.37

HR2 P.25 Principle 1-2


HR4 P.35 Principle 6



HR7 P.35-36 Principle 4


HR9

HR10 P.36

HR11 P.35


SO1 P.44-45

SO9 P.44

SO10 P.44

SO2 P.25

SO3 P.25 Principle 10

SO4 P.25 Principle 10

SO5 P.4

SO6 P.25

SO7 P.25

SO8 P.25


PR1 Since our services are directly delivered by our employees; all of them are receiving health and safety training as part of their induction program to metagate and health and safty impect our drivers assest and traind base on there needs for there jobs

PR2

PR3 P.24

PR4 P.36

PR5 P.40

PR6 P.40

PR7 P.40

PR8 P.40

PR9 P.25

Performance Indicator Cross-reference/Direct answer

LT1 25

LT2 49

LT3 47-49

LT4

LT5 49 Principle 8

LT6 49 Principle 7

LT7 47-49

LT8 37

LT9 35-36

LT10 38

LT11 35

LT12 37

LT13 37

LT14 12-13

LT15 46

LT16 35 Principle 1-2

LT17 34-35 Principle 1-2


58 A n n u a l R e p o r t | 2 0 1 1

ABANA Arab Banks of North America HR Human Resources

ADSG Abu Dhabi Sustainability Group IST Istanbul

AED United Arab Emirate Dirham IUCN International Union for Conservation of Nature

AFED Arab Forum for Environment and Development JEBA Jordan European Business Association

AMCHAM The American Chamber of Commerce in Jordan JED Jeddah

ASLG Arab Sustainability Leadership Group KG Kilograms

AMM Amman KPI Key Performance Indicator

AUH Abu Dhabi KRT Khartoum

BAH Bahrain KWI Kuwait

BEY Beirut LBG London Benchmarking Group

BOM Bombay LEV Low Emission Vehicles

C-TPAT Customs Trade Partnership Against Terrorism LPG Liquid Petroleum Gas

CAI Cairo MCAA Messenger Courier Association of Amerca

CAS Casablanca MCT Muscat

CEO Chief Executive Officer MKYEF Mousab Khorma Youth Empowerment Fund

CH4 Methane N/A Non Applicable

CMB Colombo NGO Non-Governmental Organization

CMT Customer Management Team NOX Nitro oxide

CO2 Carbon Dioxide PJSC Public Joint Stock Company

CTS Click to Ship PZEV Partial zero-emissions vehicle

DAM Damascus RUH Riyadh

DFT Department for TransportSMS

(TEXT) Short Message Service

DHA Dharan SO2 Sulfur Dioxide

DOH Doha SSN Shipment Status Notification

DQMS Data Quality Management System SULEV Super Ultra Low Emission Vehicles

DXB Dubai TAPA Transported Asset Protection Association

EDI Electronic Document Interchange THR Tehran

EINVOICE Electronic Invoice TIP Tripoli

EMS Electronic Management System TSA Transportation Security Adminstration

EPOD Electronic Proof of Delivery UAE United Arab Emirates

GCC Gulf Cooperation Council UK United Kingdom

GDA Global Distribution Alliance ULEV Ultra Low Emission Vehicles

GHG Greenhouse Gases UN United Nations

GPS Global Positioning System UNICEF United Nations Children’s Fund

GRI Global Reporting Initiative US United States

GSO Global Support Office USD United States Dollar

H&S Health and Safety VP Vice President

HKG Hong Kong YEA Young Entrepreneurs Association

HQ Headquarters

ACRONYMSACRONYMS


59

GLOSSARYAccountAbility1000(AA1000): is a series of principle-based standards intended to provide the basis for improving the sustainability performance of organizations. The AA1000 Framework was developed to help organizations build their accountability and social responsibility through quality social and ethical accounting, auditing and reporting. It addresses the need for organizations to integrate their stakeholder engagement process into their daily activities.

Carbon Dioxide: is a chemical compound often referred to as CO2, and is present in the Earth’s atmosphere.

G3 Reporting Guidelines: is a framework for reporting on an organization’s economic, environmental, and social performance.

Global Distribution Alliance (GDA): is a partnership of more than 40 leading logistics and transporta-tion companies. With operations throughout the world, the GDA is strategically positioned to provide swift and reliable global transportation solutions. Each member of the alliance provides extensive coverage and expertise in each region of the world.

Global Reporting Initiative (GRI): is a long-term, multi-stakeholder, international process whose mission is to develop and dissem- inate globally applicable Sustain- ability Reporting Guidelines.Global Support Office (GSO): is the company’s headquarters in Amman, Jordan.

ISO14000: is a set of international environmental management standards that brings worldwide focus to the environment, encour-aging a cleaner, safer, healthier world for us all. As part of the ISO standards, ISO14000 exists to help organizations minimize how their operations negatively affect the environment (cause adverse changes to air, water, or land), and comply with applicable laws, regulations, and other environ-mentally-oriented requirements.

ISO9001:2000: is a set of standards for quality management systems intended for use in any organization which designs, develops, manufactures, installs and/or services any product or provides any form of service. It provides a number of requirements which an organiza-tion needs to fulfill if it is to achieve customer satisfaction, through consistent products and

services which meet customer expectations.

London Benchmarking Group (LBG): is a group of over 100 companies working together to measure Corporate Community Investment (CCI). The LBG model provides a comprehensive and consistent set of measures for CCI professionals to determine their company’s contribution to the community, and to also capture the outputs and longer- term impacts of CCI projects on society and the business itself.

OHSAS 18001: is an interna-tional occupational health and safety management system that provides specifications to help organizations control occupa-tional health and safety risks.

Social Accountability 8000 (SA8000): is promoted as a vol- untary, universal standard for companies interested in auditing and certifying labor practices in their facilities and those of their suppliers and vendors.

Sustainability: is an attempt to provide the best outcomes for the human and the natural environment, both now and into an indefinite future.


60 A n n u a l R e p o r t | 2 0 1 1

AramexPJSCanditssubsidiariesCONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2011


61




62 A n n u a l R e p o r t | 2 0 1 1

We have audited the accompanying consolidated financial statements of Aramex PJSC (the ”Company”) and its subsidiaries (together the “Group”), which comprise the consolidated statement of financial position as at 31 December 2011 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’sresponsibilityfortheconsolidatedfinancialstatements

Management is responsible for the preparation and fair presentation of these consolidated financial state-ments in accordance with International Financial Reporting Standards and the applicable provisions of the Articles of Association of the Company and the UAE Commercial Companies Law of 1984 (as amended), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assess-ment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presenta-tion of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2011 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

INDEPENDENTAUDITORS’REPORTTOThEShAREhOLDERSOFARAMEXPJSCReportontheFinancialStatements


63

INDEPENDENTAUDITORS’REPORTTOThEShAREhOLDERSOFARAMEXPJSC(CONTINUED)

Report on other legal and regulatory requirements

We also confirm that, in our opinion, the consolidated financial statements include, in all material respects, the applicable requirements of the UAE Commercial Companies Law of 1984 (as amended) and the Articles of Association of the Company; proper books of account have been kept by the Company; an inventory was duly carried out; and the contents of the report of the Board of Directors relating to these consolidated financial statements are consistent with the books of account. We have obtained all the information and explanations which we required for the purpose of our audit and, to the best of our knowledge and belief, no violations of the UAE Commercial Companies Law of 1984 (as amended) or of the Articles of Association of the Company have occurred during the year which would have had a material effect on the business of the Group or on its financial position.

Signed by Joseph Alexander MurphyPartnerRegistration No. 492

For Ernst and Young

26 February 2012Dubai, United Arab Emirates


64 A n n u a l R e p o r t | 2 0 1 1

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The attached notes from 1 to 34 form part of these consolidated financial statements

The consolidated financial statements were authorised for issue in accordance with a resolution of the directors on 26 February 2012.

AbdullahAlMazrui FadiGhandour EmadShishtawi(Chairman) (Founder & CEO) (Senior Vice President Finance)

NOTES2011

AED’0002010

AED’000ASSETS

NON-CURRENTASSETS

Property, plant and equipment 4 445,360 332,144

Goodwill 5 1,010,109 863,199

Other intangible assets 6 30,357 8,927

Available-for-sale financial assets 7 2,219 3,988

Investments in joint ventures 8 18,108 19,165

Investment in an associate 9 1,271 -

Deferred tax assets 10 2,555 2,530

Other non-current assets 72 39

1,510,051 1,229,992

CURRENTASSETS

Accounts receivable 11 499,671 404,028

Other current assets 12 169,048 97,699

Bank balances and cash 13 314,011 554,739

982,730 1,056,466

TOTALASSETS 2,492,781 2,286,458

EQUITYANDLIABILITIES

EQUITY

Share capital 14 1,464,100 1,464,100

Statutory reserve 15 87,312 62,274

Foreign currency translation reserve 15 (17,703) (6,335)

Fair value reserve 15 (502) 1,268

Reserve arising from acquisition of non-controlling interests 15 (15,278) (12,397)

Retained earnings 16 347,181 272,089

Equity attributable to equity holders of the Parent 1,865,110 1,780,999

Non-controlling interests 30,972 24,577

TOTALEQUITY 1,896,082 1,805,576

NON-CURRENTLIABILITIES

Interest-bearing loans and borrowings 17 9,637 6,503

Employees’ end of service benefits 18 79,660 66,958

Other non-current liabilities 1,200 -

Deferred tax liabilities 10 1,117 1,295

91,614 74,756

CURRENTLIABILITIES

Accounts payable 19 163,222 129,148

Bank overdrafts 20 19,445 6,863

Interest-bearing loans and borrowings 17 12,001 6,715

Other current liabilities 21 310,417 263,400

505,085 406,126

TOTALLIABILITIES 596,699 480,882

TOTALEQUITYANDLIABILITIES 2,492,781 2,286,458

ARAMEXPJSCANDITSSUBSIDIARIESCONSOLIDATED STATEMENT OF FINANCIAL POSITIONAT 31 DECEMBER 2011


65

NOTES 2011AED’000

2010AED’000

Rendering of services 22 2,576,199 2,211,996

Cost of services 23 (1,221,261) (1,021,830)

GROSSPROFIT 1,354,938 1,190,166

Share of results of joint ventures 8 (554) (256)

Share of loss of an associate 9 (200) -

Selling and marketing expenses (122,719) (108,285)

Administrative expenses 24 (470,823) (410,802)

Operating expenses 25 (508,987) (444,596)

Other income 26 2,498 3,168

OPERATINGPROFIT 254,153 229,395

Finance income 7,360 16,283

Finance expense (1,756) (1,166)

PROFITBEFORETAX 259,757 244,512

Income tax 10 (17,799) (14,935)

PROFITFORThEYEAR 241,958 229,577

ATTRIBUTABLETO:

Equity holders of the Parent 211,538 204,092

Non–controlling interests 30,420 25,485

241,958 229,577

Earnings per share attributable to

the equity holders of the Parent:

BASICANDDILUTEDEARNINGSPERShARE 28 AED0.144 AED0.139

ARAMEXPJSCANDITSSUBSIDIARIESCONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2011

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



66 A n n u a l R e p o r t | 2 0 1 1

2011AED’000

2010AED’000

PROFITFORThEYEAR 241,958 229,577

OThERCOMPREhENSIVELOSS,NETOFTAX:

Exchange differences on translation of foreign operations (11,520) (3,603)

Net loss on available-for-sale financial assets (1,770) (977)

OThERCOMPREhENSIVELOSSFORThEYEAR,NETOFTAX (13,290) (4,580)

TOTALCOMPREhENSIVEINCOMEFORThEYEAR 228,668 224,997

TOTALCOMPREhENSIVEINCOMEATTRIBUTABLETO:

Equity holders of the Parent 198,400 199,341

Non-controlling interests 30,268 25,656

228,668 224,997

ARAMEXPJSCANDITSSUBSIDIARIESCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE PERIOD ENDED 31 DECEMBER 2011

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



67

ARAMEX

PJSCANDITSSU

BSIDIARIES

CON

SOLI

DAT

ED S

TATE

MEN

T O

F C

HA

NG

IN E

QU

ITY

FOR

THE

PERI

OD

EN

DED

31

DEC

EMB

ER 2

011

ATTRIBUTABLETOEQUITYhOLDERSOFThEPAREN

T

ShARE

CAPITAL

AED

’000

STATUTO

RYRESERVE

AED

’000

FOREIGN

CURREN

CY

TRANSLATION

RESERVE

AED

’000

FAIR

VALUE

RESERVE

AED

’000

RESERVEARISING

FROMACQUISITION

OFNON-CONTRO

LLING

INT

ERES

TSAED

’000

RETAINED

EARNINGS

AED

’000

TOTAL

AED

’000

NON-

CONTRO

LLING

INT

ERES

TSAED

’000

TOTAL

AED

’000

At

1 Ja

nuar

y 20

101,

331,

000

40,9

23(2

,561

)2,

245

- 22

4,04

81,

595,

655

28,1

431,

623,

798

Tota

l com

preh

ensi

ve

in

com

e fo

r the

yea

r-

- (3

,774

)(9

77)

- 20

4,09

219

9,34

125

,656

224,

997

Acq

uisi

tion

of

non-

cont

rolli

ng

in

tere

sts

- -

- -

(12,

397)

- (1

2,39

7)(1

,376

)(1

3,77

3)

Issu

e of

sha

re c

apit

al –

sc

ript

div

iden

ds13

3,10

0-

- -

- (1

33,1

00)

- -

-

Tran

sfer

to

stat

utor

y re

serv

e-

21,3

51-

- -

(21,

351)

- -

-

Dir

ecto

rs’ f

ees

paid

- -

- -

- (1

,600

)(1

,600

)-

(1,6

00)

Div

iden

ds p

aid

to n

on-c

ontr

ollin

g

in

tere

sts

- -

- -

- -

- (2

1,70

2)(2

1,70

2)

Non

-con

trol

ling

inte

rest

s-

- -

- -

- -

(6,1

44)

(6,1

44)

AT1JANUARY2011

1,464,100

62,274

(6,335)

1,268

(12,397)

272,089

1,780,999

24,577

1,805,576

Tota

l com

preh

ensi

ve

in

com

e fo

r the

yea

r-

- (1

1,36

8)(1

,770

)-

211,

538

198,

400

30,2

6822

8,66

8

Acq

uisi

tion

of

non-

cont

rolli

ng

in

tere

sts

- -

- -

(2,8

81)

- (2

,881

)(1

,134

)(4

,015

)

Tran

sfer

to

stat

utor

y re

serv

e-

25,0

38-

- -

(25,

038)

- -

-

Acq

uisi

tion

of

subs

idia

ries

-

- -

- -

- -

2,07

22,

072

Non

-con

trol

ling

inte

rest

s-

- -

- -

- -

(11,

033)

(11,

033)

Intr

oduc

tion

of

capi

tal o

f su

bsid

iari

es-

- -

- -

- -

537

537

Cas

h di

vide

nds

paid

to

shar

ehol

ders

- -

- -

- (1

09,8

08)

(109

,808

)-

(109

,808

)

Dir

ecto

rs’ f

ees

paid

- -

- -

- (1

,600

)(1

,600

)-

(1,6

00)

Div

iden

ds p

aid

to n

on-c

ontr

ollin

g

in

tere

sts

- -

- -

- -

- (1

4,31

5)(1

4,31

5)

AT31DECEM

BER2011

1,464,100

87,312

(17,703)

(502)

(15,278)

347,181

1,865,110

30,972

1,896,082

----

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ched

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o 34

for

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ated

fin

anci

al s

tate

men

ts


68 A n n u a l R e p o r t | 2 0 1 1

NOTES2011

AED’0002010

AED’000

OPERATINGACTIVITIES

Profit before tax 259,757 244,512

Adjustment for:

Depreciation of property, plant and equipment 4 53,137 47,741

Amortisation of intangible assets 6 2,194 962

Provision for employees’ end of service benefits 18 19,445 13,002

Provision for doubtful accounts, net 7,453 7,974

Net finance income (5,6 04) (15,117)

Share of results of joint ventures 554 256

Share of loss of an associate 200 -

Loss on disposal of property, plant and equipment 8 459

337,144 299,789

Workingcapitaladjustments:

Accounts receivable (38,985) (60,854)

Accounts payable 11,965 9,912

Other current assets (71,298) (10,978)

Other current liabilities 43,983 23,840

Cash from operations 282,809 261,709

Employees’ end of service benefits paid 18 (5,897) (5,795)

Income tax paid (15,016) (9,534)

Net cash flows from operating activities 261,896 246,380

INVESTINGACTIVITIES

Purchase of property, plant and equipment 4 (160,241) (136,893)

Proceeds from sale of property, plant and equipment 2,439 1,841

Interest received 7,360 16,283

Acquisition of subsidiaries, net of cash acquired 3 (217,087) (11,908)

Other non–current assets (32) (21)

Margin deposits (2,353) (3,513)

Intangible assets (2,734) (13)

Investments in joint ventures - (12,487)

Investment in an associate (1,471) -

Net cash flows used in investing activities (374,119) (146,711)

FINANCINGACTIVITIES

Interest paid (1,756) (1,166)

Repayment of loans and borrowings 8,419 (908)

Acquisition of non-controlling interests 3 (3,456) (13,773)

Dividends paid to non-controlling interests (14,315) (21,702)

Non-controlling interests (10,496) (8,234)

Directors’ fees paid (1,600) (1,600)

Dividends paid to shareholders (109,808) -

Net cash flows used in financing activities (133,012) (47,383)

NET(DECREASE)INCREASEINCASh

ANDCAShEQUIVALENTS (245,235) 52,286

Net foreign exchange difference (10,428) (834)

Cash and cash equivalents at 1 January 536,542 485,090

CAShANDCAShEQUIVALENTSAT31DECEMBER 13 280,879 536,542

ARAMEXPJSCANDITSSUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2011

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



69

1ACTIVITIES

Aramex PJSC (“the Parent Company”) is a Public Joint Stock Company registered in the Emirate of Dubai, United Arab Emirates on 15 February 2005 under UAE Federal Law No 8 of 1984 (as amended). The consoli-dated financial statements of the Company as at 31 December 2011 comprise the Parent Company and its subsidiaries (collectively referred to as “the Group” and individually as “Group entities”).

The Parent Company was listed on the Dubai Financial Market on 9 July 2005.

The Principal activities of the Group are to invest in the freight, express, logistics and supply chain man-agement businesses through acquiring and owning controlling interests in companies in the Middle East and other parts of the world.

The Parent Company’s registered office is Business Center Towers, 2302A, Media City (TECOM), Sheikh Zayed Road, Dubai, United Arab Emirates.

The consolidated financial statements were authorised for issue by the Board of Directors on 26 February 2012.

2SIGNIFICANTACCOUNTINGPOLICIES

2.1Basisofpreparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and applicable requirements of UAE Federal Law No. 8 of 1984 (as amended).

The consolidated financial statements are presented in UAE Dirhams (AED), being the functional currency of the Parent Company. Financial information is presented in AED and all values are rounded to the nearest thousand (AED ‘000), except when otherwise indicated.

The consolidated financial statements are prepared under the historical cost convention, except for avail-able for sale financial assets and derivative financial instruments that have been measured at fair value.

Basisofconsolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2011.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.

ARAMEXPJSCANDITSSUBSIDIARIESNOTESTOThECONSOLIDATEDFINANCIALSTATEMENTSAT31DECEMBER2011


70 A n n u a l R e p o r t | 2 0 1 1

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

– Derecognises the assets (including goodwill) and liabilities of the subsidiary– Derecognises the carrying amount of any non-control ling interest– Derecognises the cumulative translation differences recorded in equity– Recognises the fair value of the consideration received– Recognises the fair value of any investment retained– Recognises any surplus or deficit in profit or loss– Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

2.2Changesinaccountingpolicyanddisclosures

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2011:

– IAS 24 Related Party Disclosures (amendment) effective 1 January 2011– IAS 32 Financial Instruments: Presentation (amendment) effective 1 February 2010– IFRIC 14 Prepayments of a Minimum Funding Requirement (amendment) effective 1 January 2011– Improvements to IFRSs (May 2010)

The adoption of the standards or interpretations is described below:

IAS24RelatedPartyTransactions(Amendment)The IASB issued an amendment to IAS 24 that clarifies the definitions of a related party. The new defi-nitions emphasise a symmetrical view of related party relationships and clarifies the circumstances in which persons and key management personnel affect related party relationships of an entity. In addition, the amendment introduces an exemption from the general related party disclosure requirements for trans-actions with government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.

IAS32FinancialInstruments:Presentation(Amendment)The IASB issued an amendment that alters the definition of a financial liability in IAS 32 to enable enti-ties to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Group because the Group does not have these type of instruments.

IFRIC14PrepaymentsofaMinimumFundingRequirement(Amendment)The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognised as a pension asset. The Group


2SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)2.1Basisofpreparation(continued)


71

is not subject to minimum funding requirements, therefore the amendment of the interpretation has no effect on the financial position nor performance of the Group.

ImprovementstoIFRSsIn May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each stand-ard. The adoption of the following amendments resulted in changes to accounting policies, but no impact on the financial position or performance of the Group.

– IFRS 3 Business Combinations: The measurement options available for non-controlling interest (NCI) were amended. Only components of NCI that constitute a present ownership interest that enti-tles their holder to a proportionate share of the entity’s net assets in the event of liquidation should be measured at either fair value or at the present ownership instruments’ proportionate share of the acquiree’s identifiable net assets. All other components are to be measured at their acquisition date fair value (note 3).

– IFRS 7 Financial Instruments Disclosures: The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. The Group reflects the revised disclosure require ment in notes 17 and 20.

– I AS 1 Presentation of Financial Statements: The amendment clarifies that an entity may present an analysis of each component of other comprehensive income maybe either in the statement of changes in equity or in the notes to the financial statements. The components of the comprehensive income of the Group does not require analysis.

Other amendments resulting from Improvements to the following standards did not have any impact on the accounting policies, financial position or performance of the Group:

– IFRS 3 Business Combinations (Contingent consideration arising from business combination prior to adoption of IFRS 3 (as revised in 2008))

– IFRS 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment awards)

– IAS 27 Consolidated and Separate Financial Statements

– IAS 34 Interim Financial Statements

The following interpretation and amendments to interpretations did not have any impact on the account-ing policies, financial position or performance of the Group:

– IFRIC 13 Customer Loyalty Programmes (determining the fair value of award credits)

– IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments


2SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)2.2Changesinaccountingpolicyanddisclosures(continued)


72 A n n u a l R e p o r t | 2 0 1 1

2.3Standardsissuedbutnotyeteffective

Standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. This listing of standards and interpretations issued are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

IAS1FinancialStatementPresentation–PresentationofItemsofOtherComprehensiveIncomeThe amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or ‘recycled’) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects pres-entation only and has there no impact on the Group’s financial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012.

IAS12IncomeTaxes–RecoveryofUnderlyingAssetsThe amendment clarified the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always be measured on a sale basis of the asset. The amendment becomes effective for annual periods beginning on or after 1 January 2012.

IAS19EmployeeBenefits(Amendment)The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifica-tions and re-wording. The Group does not expect any impact on the financial position on performance of the Group. The amendment becomes effective for annual periods beginning on or after 1 January 2013.

IAS27SeparateFinancialStatements(asrevisedin2011)As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The Group does not present separate financial statements. The amendment becomes effective for annual periods begin-ning on or after 1 January 2013.

IAS28InvestmentsinAssociatesandJointVentures(asrevisedin2011)As a consequence of the new IFRS 11 and IFRS 12. IAS 28 has been renamed IAS 28 Investments in Asso-ciates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The amendment becomes effective for annual periods beginning on or after 1 January 2013. IFRS7FinancialInstruments:Disclosures—EnhancedDerecognitionDisclosureRequirementsThe amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Group’s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognised assets.


2SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)


73

The amendment becomes effective for annual periods beginning on or after 1 July 2011. The amendment affects disclosure only and has no impact on the Group’s financial position or performance.

IFRS9FinancialInstruments:ClassificationandMeasurementIFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to clas-sification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The completion of this project is expected over the course of 2012. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRS10ConsolidatedFinancialStatementsIFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consoli-dation — Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consoli-dated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS11JointArrangementsIFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The application of this new standard will have no impact on the financial position of the Group as the Group accounts for its joint ventures using the equity method. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS12DisclosureofInvolvementwithOtherEntitiesIFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS13FairValueMeasurementIFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance. This standard becomes effective for annual periods beginning on or after 1 January 2013.


2SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)2.3Standardsissuedbutnotyeteffective(continued)


74 A n n u a l R e p o r t | 2 0 1 1

2.4Significantaccountingjudgments,estimatesandassumptions

The preparation of the Group’s consolidated financial statements requires management to make judge-ments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncer-tainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the report-ing date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described in note 34. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

IdentifiableassetsandliabilitiestakenoveronacquisitionofsubsidiariesThe Group separately recognises assets and liabilities on the acquisition of a subsidiary when it is prob-able that the associated economic benefits will flow to the acquirer or when, in the case of liability, it is probable that an outflow of economic resources will be required to settle the obligation and the fair value of the asset or liability can be measured reliably. Intangible assets and contingent liabilities are separately recognised when they meet the criteria for recognition set out in IFRS 3. Intangible assets, acquired on acquisition, mainly represent lists of customers, bound by a contract, valued on the basis of minimum cash flows.

2.5Summaryofsignificantaccountingpolicies

Property,plantandequipmentProperty, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equip-ment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recog-nises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equip-ment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the income statement as incurred.

Except for capital work in progress, depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold improvements over 4-7 years

Buildings over 8-35 years

Furniture and fixtures over 5-10 years

Warehousing racks over 15 years

Office equipment over 3-7 years

Computers over 3-5 years

Vehicles over 4-5 years

Land is not depreciated


2SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)


75

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. Any other expenditure is recognised in the consolidated income statement as the expense is incurred. An item of property, plant and equipment is derecognised upon disposal or when no future benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and carrying amount of the asset) is included in the consoli-dated income statement in the year the asset is derecognised.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively if appropriate.

BusinesscombinationsandgoodwillBusiness combinations are accounted for using the acquisition method. The cost of an acquisition is meas-ured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non- controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the Group identifiable net assets. Acquisition costs incurred are expensed and included in admin-istrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropri-ate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previ-ously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acqui-sition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured. Subsequent settlement is accounted for within equity.

In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS.


2SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)2.5Summaryofsignificantaccountingpolicies(continued)


76 A n n u a l R e p o r t | 2 0 1 1

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabili-ties assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is dis-posed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

OtherintangibleassetsIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses, if any.

The useful lives of these intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the consolidated income statement in the expense category consistent with the function of the intangible assets.

Intangible assets with finite lives are amortised over their economic lives which are between 3 to 10 years.

Available-for-salefinancialassetsAvailable-for-sale financial assets are initially measured at fair value. After initial measurement, availa-ble-for-sale financial assets are measured at fair value with unrealised gains or losses recognised as other comprehensive income in the fair value reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other income, or determined to be impaired, at which time the cumulative loss is in the consolidated income statement in finance costs and removed from the fair value reserve.

Impairment losses on equity instruments are not reversed through the consolidated income statement;




77

increases in their fair value after impairment are recognised directly in the fair value reserve.

InvestmentsinjointventuresThe Group’s investments in its joint ventures are accounted for using the equity method.

A joint venture is a jointly controlled entity whereby the venturer has a contractual arrangement that establishes joint control over the economic activities of the entity.

Under the equity method, the investment in the joint venture is carried in the consolidated statement of financial position at cost plus post acquisition changes in the Group’s share of net asset of the joint venture.

The consolidated income statement reflects the share of the results of operations of the joint venture.

InvestmentinanassociateThe Group’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Group has significant influence.

Under the equity method, the investment in the joint venture is carried in the consolidated statement of financial position at cost plus post acquisition changes in the Group’s share of net asset of the associate.

The consolidated income statement reflects the share of the results of operations of the associate.

Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of sig-nificant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

PrepaidagencyfeesAmounts paid in advance to agents to purchase or alter their agency rights are accounted for as prepay-ments. As these amounts are paid in lieu of annual payments they are expensed to consolidated income statement over the period equivalent to the number of years of agency fees paid in advance. Impairmentofnon-financialassetsThe Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. when the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available.




78 A n n u a l R e p o r t | 2 0 1 1

If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are pre-pared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the consolidated income statement in expense categories consistent with the function of the impaired asset, except for a property previously revalued and the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

Cashandshort-termdepositsCash and short-term deposits in the consolidated statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances, and short-term deposits with an original maturity of three months or less, net of outstanding bank overdrafts and cash margin.

AccountsreceivableAccounts receivable are stated at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.

ForeigncurrencytranslationThe Group’s consolidated financial statements are presented in AED, which is also the Parent Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions and balancesTransactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional cur-rency spot rate of exchange ruling at the reporting date.

All differences arising on settlement or translation of monetary items are taken to the consolidated income statement with the exception of monetary items that are designated as part of the hedge of the Group’s net investment of a foreign operation. These are recognised in other comprehensive income until the net investment is disposed, at which time, the cumulative amount is reclassified to the consolidated income statement.




79

Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value of the item.

GroupcompaniesOn consolidation, the assets and liabilities of foreign operations are translated into AED at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the date of the transactions. The exchange differences arising on translation for consolida-tion are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the consolidated income statement.

Any goodwill arising on the acquisition of a foreign operation subsequent to 1 January 2005 and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

LoansandborrowingsandotherfinancialliabilitiesAfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method (EIR). Gains and losses are recognised in the consolidated income statement when the liabilities are derecognised as well as through (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisations are included in finance cost in the consoli-dated income statement.Other financial liabilities including deferred consideration on acquisition of subsidiaries are measured at amortised cost.

AccountspayableandaccrualsLiabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.

Employees’endofservicebenefitsThe provision for employees’ end of service benefits, disclosed as a long-term liability, is calculated in accordance with IAS19 for Group’s entities where their respective labour laws require providing indemnity payments upon termination of relationship with their employees.

PensionsandotherpostemploymentbenefitsThe Group provides for a number of post employment defined benefit plans required under several jurisdic-tions in which Aramex PJSC and its subsidiaries operate. These benefits are un-funded. The cost of providing




80 A n n u a l R e p o r t | 2 0 1 1

benefits under the defined benefit plans is determined separately for each plan using the projected unit credit method. Actuarial gains and losses for the defined benefit plans are recognised in full in the period in which they occur in other comprehensive income. Such actuarial gains and losses are also immediately recognised in retained earnings and are not reclassified to profit or loss in subsequent periods. The past service costs are recognised as an expense on a straight line basis over the average period until the benefits become vested.

The defined benefit liability comprises the present value of the defined benefit obligations using a dis-count rate based on high quality corporate bonds. The Group has not allocated any assets to such plans.

SocialsecurityPayments made to the social security institutions in connection with government pension plans applicable in certain jurisdictions are dealt with as payments to defined contribution plans, where the Group’s obliga-tions under the plans are equivalent to those arising in a defined contribution retirement benefit plan. The Group pays contributions to the social security institutions on a mandatory basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense in the period to which the employees’ service relates.

RevenuerecognitionRevenue represents the value of services rendered to customers and is stated net of discounts and sales taxes or similar levies.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is meas-ured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty or discounts. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognised.

ExpressrevenueExpress revenue is recognised upon receipt of shipment from the customer as the sales process is consid-ered complete and the risks are transferred to the customer.

FreightforwardingrevenueFreight forwarding revenue is recognised upon the delivery of freight to the destination or to the air carrier.

Catalogueshoppingandshop‘n’shipservicesrevenueCatalogue shopping and shop ‘n’ ship services revenue is recognised upon the receipt of the merchandise by the customers.

RevenuefrommagazinesandnewspapersdistributionRevenue from magazines and newspapers distribution is recognised when it is delivered to the customers.

RevenuefromlogisticsanddocumentstorageservicesRevenue from logistics and document storage services is recognised when the services are rendered.




81

InterestincomeInterest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the consolidated income statement.

BorrowingcostsBorrowing costs directly attributable to the acquisition, construction or production of an asset that neces-sarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Bor-rowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. TaxationCurrentincometaxThe Group provides for income taxes in accordance with IAS 12. As the Parent Company is incorporated in the UAE, profits from operations of the Parent Company are not subject to taxation. However, certain sub-sidiaries of the Parent Company are based in taxable jurisdictions and are therefore liable to tax. Income tax on the profit or loss for the year comprises of current and deferred tax on the profits of these subsidiar-ies. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustments to tax payable in respect of previous years.

DeferredtaxDeferred tax is provided for using the liability method on all temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

DerivativefinancialinstrumentsDerivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as a liability when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting, are taken directly to the consolidated income statement.




82 A n n u a l R e p o r t | 2 0 1 1

ImpairmentanduncollectibilityoffinancialassetsThe Group assesses at each statement of financial position date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

LeasesFinance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the assets and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in the consolidated income statement on a straight line basis over the lease term.

EarningspershareThe Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of shares outstanding during the period. The weighted average number of ordinary shares out-standing during the period and for all periods presented is adjusted for the issue of bonus shares.

ProvisionsProvisions are recognised when the Group has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured.

3BUSINESSCOMBINATIONANDACQUISITIONOFNON-CONTROLLINGINTERESTSBusiness acquisitions – year ended 31 December 2011

BercoExpress(Proprietary)Limited(SouthAfrica)During December 2011, the Group acquired 100% of the voting shares of Berco Express (Proprietary) Limited, a company specializing in logistics and transportation services based in South Africa. .

AssetsacquiredandliabilitiesassumedThe provisional fair values of the identifiable assets and liabilities of Berco Express (Proprietary) Limited and the corresponding carrying amounts, as at the date of acquisition were:




83

FAIRVALUERECOGNISEDONACQUISITION

AED’000CARRYINGVALUE

AED’000

ASSETS

Property, plant and equipment (note 4) 10,394 10,394

Trade and other receivables 63,427 63,427

Intangible assets 17,147 -

Deferred tax and other non-current assets 507 507

91,475 74,328

LIABILITIES

Trade and other payables (21,580) (21,580)

Bank overdrafts (3,485) (3,485)

(25,065) (25,065)

TOTALIDENTIFIABLENETASSETSATFAIRVALUE 66,410

Goodwill arising on acquisition (note 5) 137,253

Purchase consideration transferred 203,663

Analysis of cash flows on acquisition:

Net cash acquired with the subsidiary (3,485)

Cash paid (203,663)

NETCAShOUTFLOWONACQUISITION

(INCLUDEDINCAShFLOWSFROMINVESTINGACTIVITIES) (207,148)

PURChASECONSIDERATION AED

Cash paid (119)

Capital increase (203,662,411)

COSTOFINVESTMENT (203,662,530)

The goodwill of AED 137.2 million comprises of the value of expected synergies arising from the acquisi-tion. Goodwill was allocated to international express, domestic express, freight forwarding and logistics.

From the date of acquisition, the acquired company has contributed AED 8,447 thousand of revenue and AED 594 thousand to the net profit before tax to the Group. If the combination had taken place at the beginning of the year, revenue for the Group would have been AED 2,717 million and the profit before tax for the Group would have been AED 279 million.

Transaction costs of AED 683 thousand have been expensed and included in administrative expenses.

The net assets recognised were based on a provisional assessment of fair value as the Group has not finalised the purchase price allocation (PPA) exercise at the date of the financial statements and the fair values of the acquiree’s identifiable assets and liabilities could not be determined with certainty by the end of the period in which the combination was effected.

OneWorldCourierLimited(Kenya)During January 2011, the Group acquired 70% of the voting shares in two companies specialising in freight forwarding, based in Africa. The Group has elected to measure the non-controlling interest in the acquiree at the proportionate share of the acquiree’s identifiable net assets.


3BUSINESSCOMBINATIONANDACQUISITIONOFNON-CONTROLLINGINTERESTS(CONTINUED)Business acquisitions – year 2011 (continued)


84 A n n u a l R e p o r t | 2 0 1 1

AssetsacquiredandliabilitiesassumedThe fair values of the identifiable assets and liabilities of the acquired entities and the corresponding car-rying amounts, as at the date of acquisition were:

FAIRVALUERECOGNISEDONACQUISITION

AED’000CARRYINGVALUE

AED’000ASSETS

Property, plant and equipment (note 4) 252 252



Bank balances and cash 344 344

3,686 1,647

LIABILITIES

Trade and other payables (896) (896)

Employees’ end of service benefits (92) (92)

(988) (988)


Non-controlling interests (2,072)

Goodwill arising on acquisition (note 5) 9,657


AED’000

Analysis of cash flows on acquisition:

Net cash acquired with the subsidiaries 344

Cash paid (10,283)

NETCAShOUTFLOWONACQUISITION


The Group has finalised the purchase price allocation (PPA) exercise, within the timelines specified under IFRS 3–Business Combinations.

The goodwill of AED 9.7 million comprises of the value of expected synergies arising from the acquisition. Goodwill was allocated to International Express, Domestic Express and Freight Forwarding.

From the date of acquisition, the acquired companies have contributed AED 10,099 thousand of revenue and AED 594 thousand of the net profit before tax to the Group.


If the combination had taken place at the beginning of the year, revenue for the Group would have been AED 2,577 million and the profit before tax for the Group would have been AED 260 million.




85

AcquisitionofadditionalinterestinAramexInternationalGmbh–GermanyOn 31 August 2011, the Group acquired an additional 49% interest of the voting shares of Aramex Inter-national GmbH - Germany increasing its ownership interest to 100%. A consideration of AED 690 thou-sand was paid to the non-controlling interest shareholders. The carrying value of the net assets of Aramex International GmbH Germany at the acquisition date was AED 904 thousand, and the carrying value of the additional interest acquired was measured at AED 443 thousand. The difference of approximately AED 248 thousand between the consideration paid and the carrying value of the interest acquired has been recognised within equity as a reserve arising from acquisition of non-controlling interests.

AcquisitionofadditionalinterestinAramexInternationalServicesCo.LTD–SudanOn 1 June 2011, the Group acquired an additional 20% interest of the voting shares of Aramex International Services Co. LTD - Sudan, increasing its ownership interest to 80%. A consideration of AED 1.47 million was paid to the non-controlling interest shareholders. The carrying value of the net assets of Aramex Interna-tional Services Co. LTD - Sudan at the acquisition date was a deficit of AED 1.21 million, and the carrying value of the additional interest acquired was measured at a deficit of AED 242 thousand. The difference of approximately AED 1.71 million between the consideration paid and the carrying value of the inter-est acquired has been recognised within equity as a reserve arising from acquisition of non-controlling interests.

AcquisitionofadditionalinterestinInfo-fortAmmanOn 1 June 2011 the Group acquired an additional 33% interest of the voting shares of Info-fort Amman, increasing its ownership interest to 83%. A consideration of AED 1.3 million was paid to the non-controlling interest shareholders. The carrying value of the net assets of Info-fort Amman at the acquisition date was AED 2.8 million, and the carrying value of the additional interest acquired was AED 933 thousand. The difference of approximately AED 363 thousand between the consideration paid and the carrying value of the interest acquired has been recognised within equity as a reserve arising from acquisition of non-controlling interests.

CapitalincreaseofAramexGhanaOn 1 June 2011, Aramex Ghana increased its capital by AED 2.96 million. The total amount was paid by Aramex Group, increasing the Group’s ownership interest to 75%. The difference of AED 560 thousand between the amount paid and the interest acquired has been recognised within equity as a reserve arising from acquisition of non – controlling interests.

Businessacquisitions–yearended31December2010During the year ended 31 December 2010, the Group acquired a controlling stake in a number of companies specialising in courier and logistics services, based in Africa and the Far East.

The Group has elected to measure the non-controlling interests in the acquirees’ at the proportionate share of the acquirees’ identifiable net assets.

AssetsacquiredandliabilitiesassumedThe fair values of the identifiable assets and liabilities of the acquired entities, as at the date of acquisi-tion and the corresponding carrying amounts immediately before the acquisition were:




86 A n n u a l R e p o r t | 2 0 1 1

FAIRVALUERECOGNISEDON

ACQUISITIONAED’000

CARRYINGVALUE

AED’000

ASSETS

Property and equipment 177 177



Bank balances and cash 4,499 4,499

10,634 6,488

LIABILITIES

Trade and other payables (1,729) (1,729)

Term loan (180) (180)

(1,909) (1,909)


Non-controlling interests (2,090)

Goodwill arising on acquisition 9,772


AED’000

Analysis of cash flow on acquisition:

Net cash acquired with the subsidiaries 4,499

Cash paid (16,407)

NETCAShFLOWONACQUISITION


The Group has finalized the purchase price allocation (PPA) exercise.

The goodwill of AED 9.77 million comprises the value of expected synergies arising from the acquisitions. Goodwill was allocated to International Express, Domestic Express, Freight Forwarding and Logistics. From the date of acquisition to 31 December 2010, the new companies have contributed AED 8.6 million of revenue and AED 771 thousand of net profit before tax to the Group. If the combination had taken place at the beginning of the year, revenue for 2010 would have been AED 2,231 million and the profit before tax for the Group would have been AED 244.4 million. Transaction costs of AED 139 thousand have been expensed and included in administrative expenses.

AcquisitionofadditionalinterestinAramexhavaCargo–yearended31December2010On 1 December 2010 the Group acquired an additional 50% interest of the voting shares of Aramex Hava Cargo, increasing its ownership interest to 100%. A consideration of AED 13.77 million was paid to the non-controlling interest shareholders. The carrying value of the net assets of Aramex Hava Cargo at the acquisition date was AED 2.75 million. The carrying value of the additional interest acquired was AED 1.38 million. The difference of AED 12.4 million between the consideration paid and the carrying value of the interest acquired has been recog-nised in equity as a reserve arising from acquisition of non-controlling interests.





87

ARAMEX

PJSCANDITSSU

BSIDIARIES

NOTESTOThECONSO

LIDATED

FINANCIALSTATEM

ENTS

AT31DECEM

BER2011

4PRO

PERTY,PLANTANDEQUIPMEN

T

LAND

AED

’000

LEASEhOLD

IMPRO

VEM

ENTS

AED

’000

BUILDINGS

AED

’000

FURNITURE

ANDFIXTURES

AED

’000

WAREh

OUSING

RACKS

AED

’000

OFFICE

EQUIPMEN

TAED

’000

COMPUTERS

AED

’000

VEh

ICLES

AED

’000

CAPITAL

WORK-IN-

PRO

GRESS

AED

’000

TOTAL

AED

’000

Cos

t:

At

1 Ja

nuar

y 20

1112

,279

44,5

9877

,884

19,8

7638

,834

51,5

9782

,929

66,0

9410

7,11

350

1,20

4

Add

itio

ns

-

12,9

3356

,894

4,59

68,

922

17,9

8017

,856

13,8

6627

,194

160,

241

Acq

uisi

tion

of

subs

idia

ries

-

48

-

1,

751

-

5,

467

4,62

521

,339

-

33

,230

Tra

nsfe

rs

-

660

85,5

17(2

93)

3,49

06,

300

77(5

2)(9

5,69

9)

-

Dis

posa

ls(9

)(2

,169

)

-

(1,1

47)

(726

)(7

18)

(3,5

91)

(5,5

97)

-

(1

3,95

7)

Exc

hang

e di

ffer

ence

s(1

30)

(1,0

25)

-

(3

94)

(375

)(8

35)

(1,7

07)

(1,7

49)

-

(6

,215

)

At31Decem

ber2011

12,140

55,045

220,295

24,389

50,145

79,791

100,189

93,901

38,608

674,503

Dep

reci

atio

n:

At

1 Ja

nuar

y 20

11-

22,7

0317

,354

10,8

7511

,958

24,3

4046

,664

35,1

66

-

169,

060

Cha

rge

for t

he y

ear

-

5,

777

5,76

52,

500

2,72

98,

319

14,5

4413

,503

-

53

,137

Acq

uisi

tion

of

subs

idia

ries

-

10

-

1,

470

-

4,

822

4,00

112

,281

-

22

,584

Tra

nsfe

rs

-

192

-

(9

1)(9

)(1

06)

32(1

8)

-

-

Dis

posa

ls

-

(1,3

72)

-

(9

68)

(554

)(5

42)

(2,9

11)

(5,1

63)

-

(1

1,51

0)

Exc

hang

e di

ffer

ence

s

-

(697

)

-

(269

)(1

27)

(536

)(1

,324

)(1

,175

)

-

(4,1

28)

At31Decem

ber2011

-

26,613

23,119

13,517

13,997

36,297

61,0

0654

,594

-

22

9,14

3

Net

car

ryin

g am

ount

:

AT31DECEM

BER2011

12,140

28,432

197,176

10,872

36,148

43,494

39,183

39,307

38,608

445,360


88 A n n u a l R e p o r t | 2 0 1 1

ARAMEX

PJSCANDITSSU

BSIDIARIES

NOTESTOThECONSO

LIDATED

FINANCIALSTATEM

ENTS

AT31DECEM

BER2011

4PRO

PERTY,PLANTANDEQUIPMEN

T(CONTINUED

)

LAND

AED

’000

LEASEhOLD

IMPRO

VEM

ENTS

AED

’000

BUILDINGS

AED

’000

FURNITURE

ANDFIXTURES

AED

’000

WAREh

OUSING

RACKS

AED

’000

OFFICE

EQUIPMEN

TAED

’000

COMPUTERS

AED

’000

VEh

ICLES

AED

’000

CAPITAL

WORK-IN-

PRO

GRESS

AED

’000

TOTAL

AED

’000

Cos

t:

At

1 Ja

nuar

y 20

1012

,529

43,0

9174

,392

22,6

8733

,773

57,2

7489

,933

61,9

5030

,872

426,

501

Add

itio

ns-

6,50

13,

492

2,76

05,

047

7,47

218

,565

16,8

1576

,241

136,

893

Acq

uisi

tion

s of

sub

sidi

arie

s-

- -

20-

6457

737

- 87

8

Tra

nsfe

rs-

1,04

0-

(849

)39

3(5

,610

)1,

621

3,40

5-

-

Dis

posa

ls-

(5,4

61)

- (4

,039

)(1

82)

(6,6

55)

(26,

036)

(16,

175)

- (5

8,54

8)

Exc

hang

e di

ffer

ence

s(2

50)

(573

)-

(703

)(1

97)

(948

)(1

,211

)(6

38)

- (4

,520

)

At31Decem

ber2010

12,279

44,598

77,884

19,876

38,834

51,597

82,929

66,094

107,113

501,204

Dep

reci

atio

n:

At

1 Ja

nuar

y 20

10-

22,2

4512

,498

13,6

259,

714

28,8

6058

,102

34,5

40-

179,

584

Cha

rge

for t

he y

ear

- 4,

899

4,85

62,

142

2,20

06,

587

13,5

0113

,556

- 47

,741

Acq

uisi

tion

s of

sub

sidi

arie

s-

- -

17-

5540

589

- 70

1

Tra

nsfe

rs-

1,00

0-

(798

)30

0(4

,076

)1,

161

2,41

3-

-

Dis

posa

ls-

(5,3

78)

- (3

,829

)(1

60)

(6,2

53)

(25,

256)

(15,

372)

- (5

6,24

8)

Exc

hang

e di

ffer

ence

s-

(63)

- (2

82)

(96)

(833

)(8

84)

(560

)-

(2,7

18)

At31Decem

ber2010

-

22,703

17,354

10,875

11,958

24,340

46,664

35,166

-169,060

Net

car

ryin

g am

ount

:

AT31DECEM

BER2010

12,279

21,895

60,530

9,001

26,876

27,257

36,265

30,928

107,113

332,144

Cap

ital

wor

k in

pro

gres

s in

clud

es a

war

ehou

se u

nder

con

stru

ctio

n in

Cai

ro a

nd a

bui

ldin

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der

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in A

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an (2

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war

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con

stru

ctio

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D

ubai

).

Prop

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, pla

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men

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clud

es:

- Ve

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es w

ith

a ne

t bo

ok v

alue

of

AED

12.

01 m

illio

n (2

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AED

11.

45 m

illio

n) t

hat

have

bee

n ob

tain

ed u

nder

fin

ance

leas

es (n

ote

17).

- Ve

hicl

es a

mou

ntin

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AED

66

thou

sand

hav

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31 D

ecem

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34 t

hous

and)

.


89

5GOODWILL2011

AED’0002010

AED’000

At 1 January 863,199 853,427

Goodwill resulting from acquisition of One World Courier Limited (Kenya) 9,657 -

Goodwill resulting from acquisition of Berco Express (Proprietary)

Limited (South Africa) 137,253 -

Goodwill resulting from acquisition of Expo Express Services - 2,718

Goodwill resulting from acquisition of Avanti Worldwide Express - 7,054

AT31DECEMBER 1,010,109 863,199

Annual impairment testing for goodwill has been carried out by the management at 31 December 2011. The impairment test is based on the “value in use” calculation. These calculations have used five year cash flow projections based on actual operating results and future expected performance. A discount rate of 12% has been used in discounting the cash flows projected.

Thegoodwillwasallocatedtothefollowinggroupsofcashgeneratingunits:

2011AED’000

2010AED’000

Express shipping 309,935 291,576

Freight forwarding 191,713 190,146

Domestic shipping 303,830 183,826

Logistics 86,056 79,075

Documents storage 109,388 109,388

Publication and distribution 9,187 9,188

1,010,109 863,199

Keyassumptionsusedinvalue-in-usecalculationsThe calculation of the value-in-use is most sensitive to the following assumptions:

Transaction volumes - these are based on budgeted performance of individual cash generating units.

Discount rates - Discount rates reflect the current market assessment of the risks specific to each cash generating unit. The discount rate was estimated based on the average percentage of a weighted average cost of capital for the industry which is 12%. Cost of debt is not deemed to have any significant impact on the rate.

Growth rate estimates – Growth rate used of 3% is based on actual operating results and future expected performance.

SensitivitytochangesinassumptionsManagement believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.



90 A n n u a l R e p o r t | 2 0 1 1

6OThERINTANGIBLEASSETS2011

AED’0002010

AED’000

Cost:

At 1 January 13,435 9,276

Acquisition of subsidiaries 19,186 4,146

Acquisition of customer list 4,438 -

Additions net of amounts written off - 13

AT31DECEMBER 37,059 13,435

Amortisation:

At 1 January (4,508) (3,546)

Amortisation during the year (2,194) (962)

At 31 December (6,702) (4,508)

NETCARRYINGAMOUNTAT31DECEMBER 30,357 8,927

7AVAILABLEFORSALEFINANCIALASSETS

This item represents investment in shares of a listed company in the Dubai Financial Market.All available-for-sale financial instruments are measured using level 1 of the fair value hierarchy.

8INVESTMENTSINJOINTVENTURES

The Group has a 50% interest in Aramex Mashreq for Logistics Services, 50% interest in Aramex Delmege Logistics (PVT) LTD and 50% interest in Aramex Logistics LLC, located in Egypt, Sri-lanka and Oman, respectively.

Aramex Mashreq Logistics Services, Aramex Delmege Logistics (PVT) and Aramex Logistics LLC are private entities that are not listed in any public exchange. The following tables illustrates summarised financial information of the Group’s investment in each entity:

Shareofthejointventures’statementoffinancialposition:

2011ARAMEX MASHREQ

FOR LOGISTICS SERVICESAED’000

ARAMEX DELMEGELOGISTICS (PVT)

AED’000ARAMEX LOGISTICS LLC

AED’000TOTAL

AED’000

Non-current assets 22,319 5 2 22,326

Current assets 9,494 55 2,048 11,597

Non-current liabilities (12,246) - (10) (12,256)

Current liabilities (3,306) (51) (202) (3,559)

NETASSETS 16,261 9 1,838 18,108

2010ARAMEX MASHREQ


ARAMEX DELMEGE LOGISTICS (PVT)

AED’000ARAMEX LOGISTICS LLC

AED’000TOTAL

AED’000

Non-current assets 6,292 5 3 6,300

Current assets 17,755 48 2,246 20,049

Non-current liabilities (83) (6) (5) (94)

Current liabilities (6,920) (35) (135) (7,090)

NETASSETS 17,044 12 2,109 19,165



91

Shareofthejointventures’revenueandloss

2011

ARAMEX MASHREQ


ARAMEX DELMEGE

LOGISTICS (PVT)AED’000

ARAMEX LOGISTICS LLC

AED’000

TOTALAED’000

Revenue 12,946 - - 12,946


8INVESTMENTSINJOINTVENTURES(CONTINUED)

(Loss) profit (286) 3 (271) (554)

CARRYINGAMOUNTOFThEINVESTMENTS 16,261 9 1,838 18,108

2010

ARAMEX MASHREQ


ARAMEX DELMEGE

LOGISTICS (PVT)AED’000

ARAMEX LOGIS-TICS LLCAED’000

TOTALAED’000

Revenue 10,826 302 - 11,128

(Loss) profit 204 (190) (270) (256)

CARRYINGAMOUNTOFThEINVESTMENTS 17,044 12 2,109 19,165

9INVESTMENTINANASSOCIATE

During the year ended 31 December 2011, the Group invested in an associate named Aramex Tunisia Limited which is involved in the business of freight forwarding. The Group has a 49% interest in Aramex Tunisia Limited.

Aramex Tunisia Limited is a private entity that is not listed in any public exchange.

The following table illustrates summarised financial information of the Group’s investment in Aramex Tunisia Limited:

Shareoftheassociate’sstatementoffinancialposition:

2011AED’000

Non-current assets 102

Current assets 668

Current liabilities (360)

Netassets 410

Shareoftheassociate’srevenueandloss:

2011AED’000

Revenues 319

Loss (200)

Carrying amount of the investment 1,271


92 A n n u a l R e p o r t | 2 0 1 1

10INCOMETAX

The charge for income tax on results of operations of foreign subsidiaries comprises the following:

2011AED’000

2010AED’000

Current tax expense 17,312 15,517

Deferred income tax 940 (796)

Exchange differences (453) 214

INCOMETAXEXPENSEFORThEYEAR 17,799 14,935

Deferredtaxrelatestothefollowing:

2011AED’000

2010AED’000

Provision for doubtful accounts 410 208

Depreciation (1,047) (830)

Termination indemnities 1,026 302

Net operating losses carried forward 1,482 1,733

Capital allowance (106) (306)

Others (327) 128

1,438 1,235

RECOGNISEDASFOLLOWS:

As deferred tax assets 2,555 2,530

As deferred tax liabilities (1,117) (1,295)

1,438 1,235

The Group’s consolidated effective tax rate for 2011 is 6.85 % (2010: 6.11%).

In some countries, the tax returns for certain years have not yet been reviewed by the tax authorities. In certain tax jurisdictions, the Group has provided for its tax exposures based on the current interpretation and enforcement of the tax legislation in the jurisdiction. However, the Group’s management is satisfied that adequate provisions have been made for potential tax contingencies.

11ACCOUNTSRECEIVABLE2011

AED’0002010

AED’000

Trade receivables 538,700 439,911

Less: allowance for doubtful accounts (39,029) (35,883)

499,671 404,028

Geographicconcentrationoftradereceivablesasof31Decemberisasfollows:

2011%

2010

%

- Middle East and Africa 74 73

- Europe 16 17

- North America 2 2

- Asia 8 8



93

As at 31 December 2011, trade receivables at nominal value of AED 39,029 thousand (2010: AED 35,883 thousand) were impaired. Movements in the allowance for impairment of receivables were as follows:

2011AED’000

2010AED’000

At 1 January 35,883 33,963

Charge for the year 9,354 9,833

Acquisition of a subsidiary 583 -

Unused amounts reversed (1,901) (1,859)

Amounts written-off (4,890) (6,054)

AT31DECEMBER 39,029 35,883


11ACCOUNTSRECEIVABLE(CONTINUED)

As at 31 December, the ageing of unimpaired trade accounts receivable was as follows:

Pastduebutnotimpaired

TOTALAED’000

0-60DAYS

AED’000

61-90DAYS

AED’000

91-180DAYS

AED’000

181-365DAYS

AED’000

More than1YEAR

AED’000

2011 499,671 390,711 66,221 29,812 12,927 -

2010 404,028 312,316 54,888 26,046 10,778 -

Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. 12OThERCURRENTASSETS

2011AED’000

2010AED’000

Prepaid expenses 41,999 32,955

Advances and other receivables * 127,049 64,744

169,048 97,699

* Advances and other receivables include an amount of AED 15 million (2010: AED 15 million) due from a related

party in connection with employees participating in an incentive plan as at 31 December 2011 and 2010.

13CAShANDCAShEQUIVALENTS

Cash and cash equivalents comprise of the following:2011

AED’0002010

AED’000

Cash and short term deposits 314,011 554,739

Less: cash margin (13,687) (11,334)

Less: bank overdrafts (note 20) (19,445) (6,863)

280,879 536,542

Included in cash and short term deposits are amounts totalling AED 163,335 thousand (31 December 2010: AED 197,975 thousand) held at foreign banks abroad.


94 A n n u a l R e p o r t | 2 0 1 1

14ShARECAPITAL2011

AED’0002010

AED’000

Authorised, issued and paid up

1,464,100,000 ordinary shares of AED 1 each (2010: 1,464,100,000

ordinary shares of AED 1 each) 1,464,100 1,464,100

15RESERVES

StatutoryreserveIn accordance with the Articles of Association of certain entities in the Group and Article 255 of the UAE Federal Commercial Companies Law of 1984 (as amended), a minimum of 10% of the net profit for the year of the individual entities to which the law is applicable has been transferred to a statutory reserve. Such transfers may be ceased when the statutory reserve equals half of the paid up share capital of the applica-ble entities. This reserve is non distributable except in certain circumstances. The consolidated statutory reserve reflects transfers made post-acquisition for subsidiary companies together with transfers made by the parent company. It does not, however, reflect the additional transfers to the consolidated statutory reserves which would be made if the retained post-acquisition profits of the subsidiaries were distributed to the Parent Company.

FairvaluereserveThe reserve records fair value changes on available-for-sale financial assets until the investments are derecognised or impaired. ForeigncurrencytranslationreserveThe foreign currency translation reserve is used to record exchange differences arising from the transla-tion of the financial statements of foreign subsidiaries.

Reservearisingfromacquisitionofnon-controllinginterestsThe reserve represents the difference between the consideration paid to acquire non-controlling interests and the carrying amount of those interests at the date of acquisition.

16RETAINEDEARNINGS

DividendsThe General Assembly approved in its meeting held on 30 May 2011 a cash dividend for 2010 of 7.5% of the Company’s share capital.

During the year ended 31 December 2010, the Company’s share capital was increased by the issue of bonus shares of AED 133.1 million, being 10% of the share capital of the Company as at 31 December 2009 as approved by the shareholders in the Company’s annual General Meeting held on 18 April 2010.

Directors’feespaidDirectors’ fees of AED 1.6 million representing remuneration for attending meetings and compensation for professional services rendered by the Directors for the year 2010 were paid in 2011 (2010: AED 1.6 million representing remuneration for attending meetings and compensation for professional services rendered by the Directors for the year 2009 were paid).



95

17LOANSANDBORROWINGS2011

AED’0002010

AED’000

NON-CURRENT

Term loan 2,336 199

Notes payable 1,944 284

Finance lease obligations (a) 5,357 6,020

9,637 6,503

CURRENT

Term loan 1,178 506

Notes payable 3,979 170

Finance lease obligations (a) 6,844 6,039

12,001 6,715

(a)FinanceleaseobligationFuture minimum annual payments under all non-cancellable finance leases are as follows:

FUTUREMINIMUM

LEASEPAYMENTSAED’000

INTERESTAED’000

PRESENTVALUEOFMINIMUM

LEASEPAYMENTSAED’000

Less than one year 7,726 882 6,844

Between one and five years 6,030 673 5,357

31DECEMBER2011 13,756 1,555 12,201

Less than one year 6,761 722 6,039

Between one and five years 6,463 443 6,020

31DECEMBER2010 13,224 1,165 12,059

Finance lease obligations are denominated in Saudi Riyals (SR), GBP, Egyptian Pound (EGP) and Malaysian Ringgit (MYR) and have maturities between 2012 and 2016. Interest rates on finance lease obligations range from 6% to 13%.

18EMPLOYEES’ENDOFSERVICEBENEFITS2011

AED’0002010

AED’000

Provision as at 1 January 66,958 59,618

Provided during the year 19,445 13,002

Acquisition of a subsidiary 92 -

Paid during the year (5,897) (5,795)

Exchange differences (938) 133

Provision as at 31 December 79,660 66,958

Actuarial gains and losses - -

Present value of the defined benefit obligations 79,660 66,958



96 A n n u a l R e p o r t | 2 0 1 1

19ACCOUNTSPAYABLE

Trade payables mainly include payables to third party suppliers against invoices received from them for line haul, freight services, handling and delivery charges.

20BANKOVERDRAFTS

The Group maintains overdrafts and lines of credit with various banks. Aramex International Limited (AIL) has provided a corporate guarantee of AED 1.8 million to Audi Bank in Lebanon to secure the bank facilities given for the Aramex subsidiary in Lebanon. The outstanding balance of the overdrafts and lines of credit amounted to AED Nil (2010: AED 848 thousand).

The newly acquired company in South Africa (Berco Express Limited) has outstanding lines of credit of AED 9.776 million as at 31 December 2011 from (ABSA – member of the BARCLAYS group). The bank has Aramex PJSC’s limited suretyship that covers up to AED 15.84 million.

Two Way Group has outstanding bank overdrafts and lines of credit of AED 9.669 million as at 31 December 2011 (2010: AED 6.01 million), which are secured by a floating charge over the assets of the Two Way Group together with inter-company guarantees within the Group. Two Way Group also has an invoice discounting facility which is secured by a charge over the book debts of Two Way.

21OThERCURRENTLIABILITIES2011

AED’0002010

AED’000

Accrued expenses 250,566 208,799

Deferred revenue 13,782 12,621

Sales and other taxes 8,074 6,281

Income taxes payable 21,069 18,590

Customers’ deposits 492 86

Social security taxes payable 6,997 5,181

Others 9,437 11,842

310,417 263,400

22REVENUE2011

AED’0002010

AED’000

International express 836,638 689,112

Freight forwarding 1,073,301 924,101

Domestic express 373,120 331,153

Logistics 110,760 103,764

Publications and distribution 28,318 30,035

Others* 154,062 133,831

2,576,199 2,211,996

* Represents revenues from other special services which the Group renders, including airline ticketing and travel, visa services and revenues from document retention business. All related costs are reflected in cost of services.



97

23COSTOFSERVICES2011

AED’0002010

AED’000

International express 291,546 228,867

Freight forwarding 778,535 660,673

Domestic express 91,104 74,224

Logistics 20,733 21,236

Publications and distribution 21,166 22,807

Others 18,177 14,023

1,221,261 1,021,830

24ADMINISTRATIVEEXPENSES2011

AED’0002010

AED’000

Salaries and benefits 227,531 193,409

Rent 48,909 45,675

Depreciation 34,281 32,430

Communication expenses 21,340 19,959

Repairs and maintenance 13,456 10,898

Travel expenses 12,328 10,107

Allowance for impairment losses (note 11) 7,453 7,974

Utilities 9,762 7,818

Printing and stationary 6,596 5,504

Entertainment 5,008 4,535

Vehicle running expenses 3,636 3,320

Insurance 3,231 3,328

Conference and meeting expenses 739 1,422

Sponsorship fees 629 1,068

Government fees and taxes 4,190 2,923

Corporate Social Responsibility 6,106 6,240

Others 65,628 54,192

470,823 410,802

25OPERATINGEXPENSES2011

AED’0002010

AED’000

Salaries and benefits 338,020 294,318

Vehicle running and maintenance 63,127 57,371

Supplies 20,169 18,580

Communication expenses 5,662 5,294

Depreciation 18,856 15,311

Rent 37,642 35,145

Others 25,511 18,577

508,987 444,596



98 A n n u a l R e p o r t | 2 0 1 1


26OThERINCOME2011

AED’0002010

AED’000

Exchange gain 228 1,264

Loss on sale of property, plant and equipment (8) (459)

Miscellaneous income 2,278 2,363

2,498 3,168

27RELATEDPARTYTRANSACTIONS

Certain related parties (directors, officers of the Group and companies which they control or over which they exert significant influence) were suppliers of the Company and its subsidiaries in the ordinary course of business. Such transactions were made on substantially the same terms as with unrelated parties.

Transactions with related parties included in the consolidated income statement are as follows:

RELATEDPARTY TOTAL

OFFICERSAED’000

COMPANIESCONTROLLEDBYThEDIRECTORS

AED’000DIRECTORSAED’000

2011AED’000

2010AED’000

RENTEXPENSE 184 1,437 5,394 7,015 7,367

CompensationofkeymanagementpersonneloftheGroupCompensation of the key management personnel, including executive officers, comprises the following:

2011AED’000

2010AED’000

Salaries and other short term benefits 24,045 23,256

End of service benefits 378 183

24,423 23,439

SignificantsubsidiariesoftheGroupinclude:Aramex Amman, JordanJordan Distribution Agency, AmmanAramex India Private Limited, IndiaAramex International Egypt for Air and Local services (S.A.E), EgyptAramex, Bahrain Aramex Emirates LLC, DubaiTwo Way Forwarding & Logistics (Ireland) LimitedTwo Way Holland BV

All of the above subsidiaries are 100% owned by the Parent Company.

Certain subsidiaries of the Group are controlled through shareholder agreements and accordingly consoli-dated in these consolidated financial statements.


99


28EARNINGSPERShARE31DECEMBER

201131DECEMBER

2010

Profit attributable to shareholders of the

Parent (AED’000) 211,538 204,092

Weighted average number of shares during

the year (shares) 1,464MILLION 1,464MILLION

Basic and diluted earnings per share (AED) 0.144 0.139

29OPERATINGLEASES

AslesseeThe Group leases land, office space, warehouses and transportation equipments under various operating leases, some of which are renewable annually. Rent expense related to these leases amounted to AED 86.55 million for the year ended 31 December 2011 (2010: AED 80.82 million). The Group believes that most operating leases will be renewed at comparable rates to the expiring leases.

The approximate minimum rental commitments of the Group under the existing lease agreements are as follows:

2011AED’000

2010AED’000

Less than one year 91,072 75,261

Between one and five years 327,869 266,382

More than five years 52,610 105,254

471,551 446,897

30SEGMENTALINFORMATION

For management purposes, the Group is organised into five operating segments.- International express: includes delivery of small packages across the globe to both, retail and wholesale customers.- Freight forwarding: includes forwarding of loose or consolidated freight through air, land and ocean transport, warehousing, customer clearance and break bulk services.- Domestic express: includes express delivery of small parcels and pick up and deliver shipments within the country.- Logistics: includes warehousing and its management distribution, supply chain management, inventory management as well as other value added services.- Other operations: includes catalogue shipping services, document storage, airline ticketing and travel, visa services, and publication and distribution.


100 A n n u a l R e p o r t | 2 0 1 1

ARAMEX

PJSCANDITSSU

BSIDIARIES

NOTESTOThECONSO

LIDATED

FINANCIALSTATEM

ENTS

AT31DECEM

BER2011

30SEG

MEN

TALINFORMATION(CONTINUED

)

Man

agem

ent

mon

itor

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e op

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lts

of t

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seg

men

ts s

epar

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y fo

r the

pur

pose

of m

akin

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ons

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t re

sour

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and

per

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as

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t. S

egm

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perf

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is e

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ated

bas

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s.

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betw

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The

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and

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roup

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ts f

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1 D

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2011

and

201

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resp

ecti

vely

.

INTERNATIONAL

EXPRESS

AED

’000

FREIGhT

FORWARDING

AED

’000

DOMESTIC

EXPRESS

AED

’000

LOGISTICS

AED

’000

OThERS

AED

’000

ELIMINATION

AED

’000

TOTAL

AED

’000

Yearended31Decem

ber2011

Reve

nue

Thir

d pa

rty

836,

638

1,07

3,30

137

3,12

011

0,76

018

2,38

0-

2,57

6,19

9

Inte

r-se

gmen

t37

3,72

817

9,38

717

,000

2,36

84,

570

(577

,053

)-

Tota

l rev

enue

s1,

210,

366

1,25

2,68

839

0,12

011

3,12

818

6,95

0(5

77,0

53)

2,57

6,19

9

Gro

ss p

rofi

t545,092

294,766

282,016

90,027

143,037

-1,354,938

Yearended31Decem

ber2010

Reve

nue

Thir

d pa

rty

689,

112

924,

101

331,

153

103,

764

163,

866

- 2,

211,

996

Inte

r-se

gmen

t31

2,00

517

5,41

015

,129

1,31

84,

244

(508

,106

)-

Tota

l rev

enue

s1,

001,

117

1,09

9,51

134

6,28

210

5,08

216

8,11

0(5

08,1

06)

2,21

1,99

6

Gro

ss p

rofi

t460,245

263,428

256,929

82,528

127,036

-1,190,166

Tran

sact

ions

bet

wee

n st

atio

ns a

re p

rice

d at

agr

eed

upon

rate

s. A

ll m

ater

ial i

ntra

gro

up t

rans

acti

ons

have

bee

n el

imin

ated

on

cons

olid

atio

n. T

he G

roup

doe

s no

t se

greg

ate

asse

ts a

nd li

abili

ties

by

busi

ness

seg

men

ts a

nd, a

ccor

ding

ly, s

uch

info

rmat

ion

is n

ot p

rese

nted

.

Geographicalsegments

The

busi

ness

seg

men

ts a

re m

anag

ed o

n a

wor

ldw

ide

basi

s, b

ut o

pera

te in

fou

r pr

inci

pal g

eogr

aphi

cal a

reas

, Mid

dle

East

and

Afr

ica,

Eur

ope,

Nor

th A

mer

ica

and

Asi

a. I

n pr

esen

ting

info

rmat

ion

on t

he g

eogr

aphi

cal s

egm

ents

, seg

men

t re

venu

e is

bas

ed o

n th

e ge

ogra

phic

al lo

cati

on o

f cu

stom

ers.

Seg

men

ts a

sset

s ar

e ba

sed

on t

he lo

cati

on o

f th

e as

sets

.


101

Man

agem

ent

mon

itor

s th

e op

erat

ing

resu

lts

of t

he o

pera

ting

seg

men

ts s

epar

atel

y fo

r the

pur

pose

of m

akin

g de

cisi

ons

abou

t re

sour

ce a

lloca

tion

and

per

form

ance

as

sess

men

t. S

egm

ent

perf

orm

ance

is e

valu

ated

bas

ed o

n op

erat

ing

prof

it o

r los

s.

Tran

sfer

pri

ces

betw

een

oper

atin

g se

gmen

ts a

re o

n an

arm

’s -

leng

th b

asis

in a

man

ner s

imila

r to

tran

sact

ions

wit

h th

ird

part

ies.

The

follo

win

g ta

ble

pres

ents

rev

enue

and

pro

fit

info

rmat

ion

rega

rdin

g th

e G

roup

’s o

pera

ting

seg

men

ts f

or t

he y

ears

end

ed 3

1 D

ecem

ber

2011

and

201

0,

resp

ecti

vely

.

INTERNATIONAL

EXPRESS

AED

’000

FREIGhT

FORWARDING

AED

’000

DOMESTIC

EXPRESS

AED

’000

LOGISTICS

AED

’000

OThERS

AED

’000

ELIMINATION

AED

’000

TOTAL

AED

’000

Yearended31Decem

ber2011

Reve

nue

Thir

d pa

rty

836,

638

1,07

3,30

137

3,12

011

0,76

018

2,38

0-

2,57

6,19

9

Inte

r-se

gmen

t37

3,72

817

9,38

717

,000

2,36

84,

570

(577

,053

)-

Tota

l rev

enue

s1,

210,

366

1,25

2,68

839

0,12

011

3,12

818

6,95

0(5

77,0

53)

2,57

6,19

9

Gro

ss p

rofi

t545,092

294,766

282,016

90,027

143,037

-1,354,938

Yearended31Decem

ber2010

Reve

nue

Thir

d pa

rty

689,

112

924,

101

331,

153

103,

764

163,

866

- 2,

211,

996

Inte

r-se

gmen

t31

2,00

517

5,41

015

,129

1,31

84,

244

(508

,106

)-

Tota

l rev

enue

s1,

001,

117

1,09

9,51

134

6,28

210

5,08

216

8,11

0(5

08,1

06)

2,21

1,99

6

Gro

ss p

rofi

t460,245

263,428

256,929

82,528

127,036

-1,190,166

Tran

sact

ions

bet

wee

n st

atio

ns a

re p

rice

d at

agr

eed

upon

rate

s. A

ll m

ater

ial i

ntra

gro

up t

rans

acti

ons

have

bee

n el

imin

ated

on

cons

olid

atio

n. T

he G

roup

doe

s no

t se

greg

ate

asse

ts a

nd li

abili

ties

by

busi

ness

seg

men

ts a

nd, a

ccor

ding

ly, s

uch

info

rmat

ion

is n

ot p

rese

nted

.

Geographicalsegments

The

busi

ness

seg

men

ts a

re m

anag

ed o

n a

wor

ldw

ide

basi

s, b

ut o

pera

te in

fou

r pr

inci

pal g

eogr

aphi

cal a

reas

, Mid

dle

East

and

Afr

ica,

Eur

ope,

Nor

th A

mer

ica

and

Asi

a. I

n pr

esen

ting

info

rmat

ion

on t

he g

eogr

aphi

cal s

egm

ents

, seg

men

t re

venu

e is

bas

ed o

n th

e ge

ogra

phic

al lo

cati

on o

f cu

stom

ers.

Seg

men

ts a

sset

s ar

e ba

sed

on t

he lo

cati

on o

f th

e as

sets

.


30SEGMENTALINFORMATION(CONTINUED)

Revenues, assets and liabilities by geographical segment are as follows:

2011AED’000

2010AED’000

REVENUES

Middle East and Africa 1,775,517 1,564,778

Europe 504,284 408,105

North America 47,530 46,878

Asia 248,868 192,235

2,576,199 2,211,996

ASSETS

Middle East and Africa 2,071,639 2,072,099

Europe 296,697 109,432


Asia 99,452 81,306

2,492,781 2,286,458

NON-CURRENTASSETS*

Middle East and Africa 448,014 323,467

Europe 24,877 18,034


Asia 12,528 11,415

495,096 360,236

LIABILITIES

Middle East and Africa 432,887 347,228

Europe 111,526 86,680


Asia 37,236 32,006

596,699 480,882

* Non-current assets for this purpose consist of property, plant and equipment, other intangible assets, investments in joint ventures and investment in an associate. Goodwill is allocated to business segments (note 5).


102 A n n u a l R e p o r t | 2 0 1 1

31COMMITMENTSANDCONTINGENCIES

Contingentliabilities2011

AED’0002010

AED’000

Letters of guarantee 60,822 51,143

CapitalcommitmentsAs at 31 December 2011, the Group has capital commitments of AED 9.04 million (2010: AED 81.74 million) towards purchase/construction of property, plant and equipment.

32RISKMANAGEMENT

InterestrateriskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group is exposed to interest rate risk on its interest bearing assets and liabilities (bank deposits, bank overdrafts, notes payable and term loans).

The sensitivity of the consolidated income statement is the effect of the assumed changes in interest rates on the Group’s profit for one year, based on the floating rate financial assets and financial liabilities held at 31 December.

The following table demonstrates the sensitivity of the consolidated income statement to reasonably pos-sible changes in interest rates, with all other variables held constant. There is no other direct impact on the Group’s equity.

INCREASE/(DECREASE)INBASISPOINTS

EFFECTONPROFITFORThEYEARAED’000

2011

Variable rate instruments +100 (144)

Variable rate instruments -100 144

2010

Variable rate instruments +100 (72)

Variable rate instruments -100 72

CreditriskThis is the risk that other parties will fail to discharge their obligations to the Group. The Group manages credit risk with its customers by establishing credit limits for customers’ balances and also disconnects the service for customers exceeding certain limits for a certain period of time. Also, the diversity of the Group’s customer base (residential, corporate, government agencies) limits the credit risk. The Group also has a credit department that continuously monitors the credit status of the Group’s customers.

The Group also deposits its cash balances with a number of major high rated financial institutions and has a policy of limiting its balances deposited with each institution.



103

TradeandotherreceivablesThe Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has less of an influence on credit risk. The Group earns its revenues from a large number of customers spread across different geographical segments. However, geographically 74 percent of the Group’s trade receivables are based in Middle East and Africa.

Management has established a credit policy under which new customers are analysed individually for cred-itworthiness before the Group’s standard payment and delivery terms and conditions are offered. Purchase limits are established for customers, who represent the maximum open amount without requiring approval from senior Group management; these limits are reviewed regularly.

A significant portion of the Group’s customers have been transacting with the Group for a number of years, and losses have occurred infrequently. In monitoring customer credit risk, customers are grouped accord-ing to their credit characteristics, including whether they are an individual or legal entity, whether they are an agent, wholesaler, retailer or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss com-ponent that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

LiquidityriskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group currently has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations.


32RISKMANAGEMENT(CONTINUED)


104 A n n u a l R e p o r t | 2 0 1 1



Liquidityrisk(continued)

The table below summarises the maturities of the group’s financial liabilities at 31 December, based on contractual undiscounted payments:

At31December2011

LESSThAN3MONThSAED’000

3TO12MONThSAED’000

1-2YEARAED’000

2-5YEARSAED’000

>5YEARS

AED’000TOTAL

AED’000

Term loans 178 1,215 2,127 318 - 3,838

Notes payable 1,455 2,874 1,935 93 - 6,357

Finance lease obligations 2,233 5,493 4,801 1,229 - 13,756

Bank overdrafts 19,445 - - - - 19,445

Trade and other payables 431,100 - - - - 431,100

454,411 9,582 8,863 1,640 - 474,496

At31December2010

LESSThAN3MONThSAED’000

3TO12MONThSAED’000

1-2YEARAED’000

2-5YEARSAED’000

>5YEARS

AED’000TOTAL

AED’000

Term loans 151 385 182 23 - 741

Notes payable 68 126 91 221 - 506

Finance lease obligations 1,946 4,814 4,647 1,816 - 13,223

Bank overdrafts 6,863 - - - - 6,863

Trade and other payables 361,337 - - - - 361,337

370,365 5,325 4,920 2,060 - 382,670

CurrencyriskForeign currency risk is the risk that the fair value of future cash flows of financial instruments will fluctu-ate because of changes in foreign currency exchange rates.

The Group is exposed to currency risk mainly on purchases and sales that are denominated in a currency other than the respective functional currencies of the Group entities, primarily the United States Dollar (USD), Euro, Egyptian Pound, Sterling (GBP) and the Indian Rupee (INR). The currencies in which these transactions are primarily denominated are Euro, USD, and GBP. The Parent Company’s and a number of other Group entities’ functional currencies are either the USD or currencies that are pegged to the USD. As a significant portion of the Group’s transactions are denominated in USD, this reduces currency risk. The Group also has currency exposures on intra group transactions in the case of Group entities where the functional currency is not the USD or a currency that is not pegged to the USD. Intra Group transactions are primarily denominated in USD.

The Group hedges some of its trade payables denominated in certain foreign currencies, mainly Euros. However, a significant portion of the Group’s trade payables and all of its foreign currency receivables, denominated in a currency other than the functional currency of the respective Group entities, are subject to risks associated with currency exchange fluctuation. The Group reduces some of this currency exposure


105

by maintaining some of its bank balances in foreign currencies in which some of its trade payables are denominated. This provides an economic hedge.

The following table demonstrates the sensitivity to a reasonably possible change in the AED exchange rate, with all other variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities).

ChANGESINCURRENCYRATETOAED%

EFFECTONPROFITBEFORETAXAED’000

2011

EUR +10 806

INR +10 146

GBP +10 2,407

EGP +10 (730)

2010

EUR +10 150

INR +10 1,191

GBP +10 1,384

EGP +10 (1,122)

The effect of decreases in exchange rates are expected to be equal and opposite to the effects of the increases shown.

EquitypriceriskThe Group’s listed equity securities are susceptible to market price risks.

The following table shows the effect of changes in year -end prices of equity securities:

ChANGESINMARKETYEARENDPRICE%

EFFECTONEQUITYFORThEYEARAED’000

2011

Dubai financial market +5 111Dubai financial market -5 (111)2010

Dubai financial market +5 199Dubai financial market -5 (199)

CapitalmanagementThe Group manages its capital structure and makes adjustments to it in light of changes in business condi-tions. No changes were made in the objectives, policies or processes during the years ended 31 December 2011 and 31 December 2010. Capital comprises share capital, statutory reserve, reserve arising from acquisition of non-controlling interest and retained earnings, and is measured at AED 1,883,315 thousand as at 31 December 2011 (2010: AED 1,786,066 thousand). The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market con-fidence and to sustain future development of the business. The Board of Directors monitors the return on



Currencyrisk(continued)


106 A n n u a l R e p o r t | 2 0 1 1


32RISKMANAGEMENT(CONTINUED)Capitalmanagement(continued)

capital, which the Group defines as net operating income divided by total shareholders’ equity, excluding minority interests. The Board of Directors also monitors the level of dividends to shareholders.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Group cur-rently has minimal borrowings. In the medium to long term, the Group believes that having a debt to equity ratio of up to 50% would still enable the Group to achieve its objective of maintaining a strong capital base.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements other than the statutory requirements in the jurisdictions where the Group entities are incorporated.

33FAIRVALUESOFFINANCIALINSTRUMENTS

Financial instruments comprise financial assets and financial liabilities.

Financial assets consist of cash and bank balances, receivables, available-for-sale financial assets and other current assets. Financial liabilities consist of loans and borrowings, bank overdrafts, trade payables and other current liabilities.

The fair values of financial instruments are not materially different from their carrying values. The Group uses the following hierarchy for determining and disclosing the fair value of financial instru-ments by valuation technique:Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilitiesLevel 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The fair values of all instruments measured at fair value are determined using level 1 in the fair value hierarchy.

34KEYSOURCESOFESTIMATIONUNCERTAINTY

ImpairmentofaccountsreceivableAn estimate of the collectible amount of trade accounts receivable is made when collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates.

At the statement of financial position date, gross trade accounts receivable were AED 538,700 thousand (2010: AED 439,911 thousand) and the provision for doubtful debts was AED 39,029 thousand (2010: AED 35,883 thousand). Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the income statement.


107

UsefullivesofpropertyandequipmentThe Group’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation charge would be adjusted where the management believes the useful lives differ from previ-ous estimates. FairvaluemeasurementofcontingentconsiderationContingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a derivative and, thus, a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount factor.

As part of the identification and measurement of assets and liabilities in the acquisition of Acquaship customer list, the Group identified an element of contingent consideration with a fair value of AED 2,716 thousand at the acquisition date, remeasured to AED 1,704 thousand as at the reporting date, which is classified as current and non-current liabilities.

GoodwillimpairmentThe impairment test is based on the “value in use” calculation. These calculations have used cash flow projections based on actual operating results and future expected performance. A discount rate of 12% has been used in discounting the cash flows projected (refer to note 5).

ProvisionfortaxThe Group reviews the provision for tax on a regular basis. In determining the provision for tax, laws of particular jurisdictions (where applicable entity is registered) are taken into account. The management considers the provision for tax to be a reasonable estimate of potential tax liability after considering the applicable laws and past experience.

EndofservicebenefitsIn determining the appropriate discount rate, management considers the interest rates of corporate bonds in the respective currency with at least AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The underlying bonds are further reviewed for quality, and those having excessive credit spreads are removed from the population of bonds on which the discount rate is based, on the basis that they do not represent high quality bonds.

The mortality rate is based on publicly available mortality tables for the related countries. Future salary increases are based on expected future inflation rates for the respective country.

UsefullivesofintangibleassetswithfinitelivesThe Group’s management determines the estimated useful lives of its intangible assets with finite lives for calculating amortisation. This estimate is determined after considering the expected pattern of consump-tion of future economic benefits embodied in the asset. Management reviews the amortisation period and amortisation method for an intangible with a finite life at least each financial year end and future amortisation charges will be adjusted where the management believes the useful lives differ from previous estimates.


34KEYSOURCESOFESTIMATIONUNCERTAINTY(CONTINUED)


108 A n n u a l R e p o r t | 2 0 1 1

INDEPENDENTASSURANCE


109


110 A n n u a l R e p o r t | 2 0 1 1


111
